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Home / Business / Don't worry, you won't start seeing ads on Netflix anytime soon – BGR

Don't worry, you won't start seeing ads on Netflix anytime soon – BGR



Archive analysts and advertising professionals love to watch some misguided wisdom about Netflix – namely that its embrace of advertising is avoided for so long is an inevitability. An assumption that has come back in the news, thanks to Nomura analysts, expecting a Netflix subscription class that includes advertising to bring in more than $ 1 billion in new revenue for the streaming giant.

This calculation is based on the assumption that Netflix will introduce a free subscription account next year and grow to around a quarter of the company's paid base of subscribers the following year.

This is the kind of thing Wall Street will no doubt love. The Street requires predictability, though chasing such a thing is an idiotic glory as well as constant, steady, uninterrupted growth. The advertising industry has also turned this drum on, claiming that everyone knows that Netflix will eventually have to run ads (of course, these ads are explicit in this discussion).

The Nomura calculations of Netflix revenue from ads achieved headlines on Friday and included this note from analyst Mark Kelley, who wrote in a research report that: "An ad-supported tier can provide a lift to release cash flow, reducing the need for Netflix to increase debt often, especially beyond 2021

in a potentially rising interest rate environment. "

Just blowing past the fact that ok, $ 1 billion is fine and everything – but Netflix will actually increase sales more than 4 billion dollars in 2019 alone thanks to a combination of new subscriber grants and price increases. (h / t to former Amazon Studios strategic leader Matthew Ball, whose Twitter account provides a fountain of knowledge to anyone who follows this space.)

To its last point, # 5, some of you pay as little as $ 12.99 a month for your Netflix subscription. It's already quite low, and besides – the research is clear. Assuming for a moment that Netflix is ​​ever completely committed to offering ads, tons of you will cancel. Although Netflix dropped your monthly bill by a few dollars because of the ads.

The other thing that this zombie premise that will not die refuses to recognize is how creative Netflix can get before they even come close to thinking about ads. For example, this assumption seems to believe that Netflix's revenue is binary. That there is quite a lot of subscription revenue, and maybe advertising revenue at some point.

But it ignores other interesting opportunities and revenue drawers that Netflix could immerse in. How many of us, for example, never thought Netflix would enter the world of mobile video games? And those of you who are thrilled with the subsequent return of Stranger Things have undoubtedly seen the myriad brand partnerships as with companies such as Coca-Cola and Baskin-Robbins who have worked with Netflix to promote the new season . There is hardly anyone to tell how creative Netflix can follow these lines.

The point here is that Netflix users are fortunate that the streaming service is not run by prayer counters who think pulling the ad slot is inevitable, but by managers who put high priority on the user experience and build around it as much as possible. That's how the company came here first, triggering Blockbuster, the paradigm switched to streaming, the foresight to invest in its own original content and everything else along the way.

Image source: Photo by Olly Curtis / Future / Shutterstock


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