Netflix Would Make $1 Billion Per Year on an Ad-Supported Subscription

Netflix Would Make $1 Billion Per Year on an Ad-Supported Subscription

Netflix has grown into a massive company in a short period of time largely due to the streaming platform’s advertisement free business model. However, other major networks including have decided to open their own streaming networks to compete with Netflix. As a result, people are wondering if Netflix will remain ad-free in the coming years. Interestingly, a new report has revealed that Netflix would make about $1 billion per year if the company introduces an ad-supported model.

The discussion of Netflix’s ad supported model shouldn’t really surprise anyone at this point. Industry experts for a while have stated that Netflix will be forced to implement advertisements in the network sooner or later due to increased competition in the streaming market. Moreover, as other networks’ contents leave Netflix in the coming years, the streaming giant will be forced to heavy invest in content production and marketing. This will ultimately lead to higher amount of annual budget.

As a result, Netflix will be forced to either increase its pricing for subscription or introduce an ad-supported tier to its offerings. As subscribers are already somewhat unhappy with the higher prices of Netflix, Netflix might end up with an ad-supported model similar to Hulu’s offerings. At the moment, Hulu offers an ad-supported model which is more popular than the ad-free, more expensive plan.

While Netflix doesn’t have plan to bring an ad-supported model just yet, Instinet analysts claimed  that Netflix would make $1 billion if the company chooses bring such model in the mix. The firm assumed that Netflix would introduce an ad-supported model next year and the plan would have a total of 25 percent of current Netflix subscriber base by 2021.

At the moment, it’s highly unlikely that Netflix would introduce a plan as executives of the company claimed Netflix will remain ad-free. But given that Disney+ is set to rack up tons of subscribers in the first few years, Netflix might struggle in the coming years. As a result, it might introduce advertisements going forward regardless of the current stance. However, it’s too early to say anything and we will have to see if Netflix continues to remain ad-free to give its viewers a degree of freedom that is absent from other sources of entertainment.

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