Netflix co-CEO Ted Sarandos has revealed that the company is keeping an eye on a free ad-supported TV (FAST), as it seeks to boost its ads business.
Ted disclosed that he is open to different models right now while considering FAST channels which are rapidly gaining popularity amongst streaming services.
In his words,
“We’re open to all these different models that are out there right now, but we’ve got a lot on our plate this year, both with the paid sharing and with our launch of advertising and continuing to this slate of content that we’re trying to drive to our members. So, we are keeping an eye on that segment for sure”.
Reports disclose that the FAST industry will reach 216 million monthly active users in 2023, driving $4.1 billion in ad revenue.
Investors King understands that subscription fatigue and surging inflation have driven many customers to free ad-supported streaming services often called FAST platforms. Platforms like Amazon, Freevee, Roku Channel, PlutoTV, and Tubi, have all become big players in the FAST market.
Currently, the online video streaming industry is in a state of transition as it adopts the new realities of how consumers want to consume content.
The rise of FAST which is rapidly gaining popularity is an indicator of changes in viewer demands. In order to keep up with the industry, broadcasters must adapt to these changes and adopt FAST content delivery.
Last year, Netflix admitted its revenue growth slowed considerably, and in response, to solving the problem, it disclosed plans to bring in a subscription tier packed with adverts.
In 2022, the company finished the year with 231 million paid memberships and generated $32 billion in revenue, $5.6 billion in operating income, $2 billion of net cash from operating activities, and $1.6 billion of free cash flow (FCF)
The company’s former co-CEO Reed Hastings who recently resigned, back in April last year disclosed that adverts were being worked on as the company seeks to get money from advertisers who want to tap into its millions of subscribers
Netflix which admitted that 2022 was a tough year, is counting on its ad business to be a big source of income. Overall, it estimates $8.17 billion in revenue for the first quarter (Q1) of 2023, while expecting an operating income of 3.9%.