Ad-Supported Strategy Shift: Netflix Refocuses on Ads and Original Content
One of the world’s largest streaming platforms, Netflix, is set to undergo a major shift in its business strategy. Following its failed attempt to acquire Warner Bros. Discovery, the company will now fully focus on ad-supported subscriptions and original content production.
Last month, Netflix lost the bid to acquire Warner Bros. Discovery. Partnering with Oracle and SoftBank, David Ellison acquired Warner Bros. for $110 billion. As a result, popular franchises such as Game of Thrones and Friends went to Paramount Skydance instead of Netflix. Despite this setback, Netflix’s shares rose by 13 percent, as investors welcomed the company’s plans to expand its advertising business.
During the release of its first-quarter earnings on Thursday, Netflix Chief Executive Officers Ted Sarandos and Greg Peters are expected to outline the new strategy. According to data from LSEG, Netflix is projected to generate $12.18 billion in revenue in the first quarter of this year, including $634 million from advertising.
The company increased subscription prices in the United States in March, which could further boost its annual revenue outlook. The price hike may also drive more users toward ad-supported subscription plans.
John Belton, portfolio manager at Gabelli Funds, said, “Netflix is entering a new phase in the advertising business, where it is becoming one of the world’s largest global advertising platforms.”
Netflix is also placing greater emphasis on live-streamed content. Recently, it attracted 18.4 million viewers by live-streaming a concert by South Korean music group BPS from Seoul. Additionally, the 2026 World Baseball Classic has become the most-watched baseball event.
Michael Ng, an analyst at Goldman Sachs, believes that Netflix’s advertising-based subscription revenue could reach approximately $10 billion by 2027. Despite missing out on a major deal like Warner Bros., Netflix is poised to reach new heights through its own strengths.
DBTech/BMT/OR
