Netflix, one of the most valued entertainment company, has generated most of its revenue using the subscription-based business model. Netflix’s revenue saw a jump of 35 percent in 2018 to $16 billion.
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However, Netflix is also spending vast sums of money on original content to attract new customers while keeping the older ones. According to the financial reports, free cash flow in 2018 was negative $3 billion, which will increase to $3.5 billion in 2019.
Looking at the reports, it is clear that Netflix needs to rethink its financial and monetization strategy in the ever-changing entertainment industry.
Ads are making way to Netflix
Netflix is looking for a catalyst to boost its finances, which could be ads. Yes, you read it right, Netflix is planning to inserts ads in its currently advertisement free ecosystem.
According to an earlier report of EmpireNews, Netflix is going to move away from the currently ad-free expansive model to an ad-based one to reduce the cost of subscription for its consumers.
Netflix CEO Reed Hastings has said in the past that company is aware of the fact that they are missing out on several markets due to the pricing.
Ads on streaming service are not new
Looking at the current trends of the market, ads have provided ming boggling gains to the entertainment industry.
Many streaming platforms got strong growth in their financial after adopting the ad-based model. The prime example of growth are Connected TV and Roku.
Many experts believe that the high cost of plans and success of other ad-based streaming platforms could force Netflix to change its policies.
Final Thoughts
As per the reports, it is only a matter of time before Netflix introduces its ad-based plans. Hulu’s ad sales head also supported the idea of the introduction of ads to Netflix.
If Netflix goes on to introduce ads, then it surely will drive down the price of its plans, which would eventually help in capturing a large market.