The drop in the number of subscribers reported last week by Netflix was surprising, even for the company itself, which is reconsidering a low-cost version that includes the presence of advertising. Although the streaming giant has stayed away from that alternative for years, recent statements by its founder and CEO, Reed Hastings , show that they are considering it today. At last week’s earnings presentation, the manager explained: “You know I’ve been against the complexity of advertising and that I’m a big fan of the simplicity of subscription, but as fanatic as I am of that, I’m more fanatical about consumer choice and allowing consumers who want to have a lower priced (subscription) and who tolerate advertising, to get it.”
Although Hastings did not speak of an exact date for the launch of this new subscription option, he hinted that it could happen next year. The fact that Netflix, still the leader in streaming platforms, develops a low-cost subscription with ads, it could shock the entire streaming industry. Ash Gangwar, CEO of the media buying company The Trade Desk , told Yahoo! Finance : “It’s huge, not only because of what it means for Netflix, but also because of the impact it will have on the entire television ecosystem. (The decision) is going to force a lot of changes. There is subscriber fatigue at this point.”
And is not for less. There are more and more streaming platforms on the market and users have become selective, since for many it is not feasible to maintain the subscription of six or seven services simultaneously. Cheaper subscription options might make them reconsider this option. Both HBO Max and Hulu already offer lower-cost subscriptions in the United States, and a few weeks ago Disney + announced that it is already working on a low-cost subscription that could be available in the United States in late 2022 and internationally sometime in 2023.
In his remarks, Gangwar explains that since their service is currently ad-free and independent of ad revenue, Netflix could experiment and completely change the ad ecosystem for the better: “Netflix can say, ‘How do I create the best experience for the consumer?’ If that’s a 30-second ad, great. But if it’s not, they can be creative…Netflix could force streaming services to do things better than they do today.”
Regardless of the subscription modalities they develop, streaming platforms must remember that, in the end, what will make a user stay as a subscriber for a long time is the quality of the content . Offering a subscription with ads helps solve the problem, but it’s not the whole story. In an effort to compete, streaming platforms offer more and more content, not necessarily of the best quality.