REPORT: Netflix Forgoes $2.29 Billion in Potential Advertising Revenue Every Year

| February 6, 2017 | Netflix, Top Picks | No Comments

Everyone seems to love Netflix these days, except for perhaps, potential advertisers.

Netflix is forgoing $2.29 BILLION a year in potential advertising revenue

For about $11 a month, users get access to thousands of movies, TV shows, and Netflix originals, and the best part, all of this entertainment is commercial free. In fact, we reported in 2015 that Netflix saves us from over 130 hours of commercials a year.

Netflix has taken a hard stance against ever introducing advertising to its platform. It has been a key value proposition for the company for years, and from what we can gather, will not change anytime soon. We all know they aren’t the same as AMC, HGTV or TNT, here.

But how much is all this potential advertising space worth?

We ran the numbers and found that by not selling ad slots during their shows and movies, Netflix is forgoing $2.29 BILLION a year in potential advertising revenue.

Here’s the full breakdown:

Avg daily Netflix usage Avg minutes of ads per 30 minute show Avg cost of 30 second ad slot
90 minutes per day 7.75 minutes $112,000
(source) (source) (source)
Total ad slots over 90 minutes Total potential ad revenue per day Annual potential ad revenue
56 $6.3 million $2.29 billion

Netflix’s annual revenue is around $8.8 billion, so there’s no question, if Netflix wanted to crank up their money making machine, this would be an easy way to do so.

Well, it’s definitely not quite that simple. We polled Netflix subscribers and found that 79% would much rather pay more for Netflix than ever see ads on the platform. Netflix is well aware that if they introduced commercials, there would likely be a mass exodus of subscribers. One of the reasons so many people are happy to pay a monthly fee for the service is to avoid commercials. Many parents have reported that they love Netflix because it saves their kids from hundreds of hours of ads for sugary cereal and the latest trendy toy every year.

Even writing this report, we hope Netflix is able to remain ad free as long as it exists, as the joy of binge-watching shows like ‘It’s Always Sunny in Philadelphia,’ or watching a great movie like ‘The Big Short’ without commercial interruption is what keeps drawing us back to the platform, barely thinking twice about the monthly subscription cost.

A former Netflix exec confirmed in 2015 that advertising isn’t even on the streaming service’s radar, which should act as a confidence boost for those worried about any sort of change.