After resisting the temptation to include an ad-supported tier on its platform for so long, why would Netflix ever make the change?
Well according to some analysts, the company could make an additional $US1 billion ($AU1.42bn) per year if it did.
Nomura Instinet analyst Mark Kelley wrote a note to clients about the idea over the weekend.
“An ad-supported tier could provide a lift to free-cash flow, reducing the need for Netflix to raise debt frequently, especially beyond 2021 into a potentially rising rate environment,” he said.
“Using what we believe are relatively conservative assumptions (launch of a free tier in the US in 2020, scaling to about a quarter of the paid subscriber base by 2021), we see a potential revenue opportunity of more than $1 billion per year, with nearly $700 million flowing through to net income, given the favorable margin dynamic of the advertising business,” he said.
And while Kelley indicated he believes the lure of ads might be “too difficult for Netflix to continue to resist,” he is unsure what it would look like.
Netflix could potentially make a free version of the service entirely supported by advertising or alternatively offer its ad-supported tier at a discounted rate, as its US rival Hulu does.
If Netflix was to add an ad-supported model, it would be doing so in an increasingly crowded streaming market.
Disney+ is not far off entering the mix, while the original content on Apple TV+ streaming service is due to arrive later this year.
In response, Netflix has doubled down on its original content, Netflix VP of original content Cindy Holland saying recently the company always knew “traditional players” like Disney would enter the fold.
“We believed this shift would all happen, it’s just taken many years longer than we thought,” Holland said, adding that the threat of such rivals potentially ending their licensing agreements with Netflix has prompted original content.
NAB, in partnership with TBWA\Melbourne and Mindshare, has unveiled its latest campaign dubbed “Wrangle Your Money”. The national campaign demonstrates how NAB is supporting and empowering customers to make better financial moves. As part of the “More Than Money” brand platform, the latest work comes at a pivotal time as the country continues to grapple […]
Activation Union is thrilled to announce the appointment of Bree Mankin as Managing Partner. In this pivotal role, Bree will spearhead the agency’s growth initiatives and client strategy, leveraging her extensive experience and innovative approach in delivering exceptional results for her clients. With over two decades of experience in marketing and communications, Bree is a […]
Toyota Australia has launched its highly anticipated new all-electric vehicle, the bZ4X, on Australian shores through a nationwide integrated campaign. Spearheaded by a big spot, the campaign was created by independent creative agency HERO, which sees a typical EV sceptic named Barry behind the wheel of an all-new Toyota bZ4X much to the surprise of […]
Canva has announced its very first podcast: Design Surfaces. Covering all areas of design, from brand campaigns to UX flows, the podcast digs deep into the intricate parts of designers’ brains to unearth valuable insights, unique perspectives, and what makes them tick. The Design specialty at Canva is made up of some of the most […]
SBS is searching for its most daring, unflinchingly fearless and boundary-smashing factual format yet, issuing a call out for impactful ideas for new documentary series unlike anything seen on Australian screens before, with up to $50,000 in development funding on offer. Announced this morning at the Australian International Documentary Conference (AIDC) in Melbourne, SBS is […]
Full-service media agency Resolution has appointed Sarah Truong as head of investment to lead the agency’s investment product. Sarah joins from PHD where she was Group Investment Director for half a decade. With 14 years’ experience in the media industry including seven years at media agency, Carat, Sarah a proven track record for delivering results-driven […]
Brisbane Economic Development Agency (BEDA) has launched a new domestic tourism campaign, Brisbane Favours the Bold, this week, appealing to those who search for the unexpected to discover the new Brisbane. Created in partnership with VML and dentsu Queensland, the campaign aims to redefine perceptions of Queensland’s thriving capital, strengthen awareness of Brisbane’s leisure offering, […]
Are Media, Australia’s leading omnichannel content company for women, today unveiled the keenly anticipated first issue of the new ELLE Australia magazine. The 244-page Bright Young Things issue – featuring actor Sophie Wilde on the cover – clearly stamps ELLE Australia as the fashion bible for smart, stylish Gen Z and millennial women who love […]
The Sydney Roosters are facing a huge amount of fallout over allegations that Spencer Leniu made an on-field racial slur against Broncos player Ezra Mam in yesterday’s Las Vegas season opener. Mam filed an official complaint against Leniu after the Roosters prop allegedly called the Broncos five-eighth a “monkey” on the field. Leniu tried to […]
To celebrate International Women’s Day, The Association for Data-Driven Marketing and Advertising (ADMA), has launched a new initiative to honour and spotlight the dynamic women in the marketing sector across the country. Lead image: ADMA Website This year, as the world embraces the theme #InspireInclusion for International Women’s Day on March 8, ADMA is asking […]
KIA's marketing boss coy on how much all these stars cost. Was even more coy on the bar tab at the end of the shoot...
With the Easter break historically one of the busiest on our roads, Nine.com.au and Drive today launched a month-long campaign to raise awareness of the importance of defensive driver training courses. Too many young drivers are killed or injured on our roads each year. Younger drivers are the most overrepresented group in this tragic statistic, […]
Rolling Stone Australia publisher The Brag Media has today unveiled a stellar list of nominees for the 2024 Shure Rolling Stone Australia Awards, which return to Sydney on Tuesday, March 26, with a star-studded party to celebrate Aussie music. For the first time, the 2024 edition of the awards will take place at Ivy Sydney […]
Free TV has said that today’s announcement by Meta that it will not be renewing any of the deals struck with Australian media companies for use of news content on its platforms should be met with swift action by the government. Meta today revealed it will walk away from funding Aussie journalism once the current content […]