Reed Hastings, co-CEO of Netflix, has recently made it known that the streaming service is open to services that are at a lower price. However, the services would include ads. Netflix delivered its fourth-quarter report in April and noted that the service has lost about 200,000 subscribers. This is the first loss that the company has seen in over 10 years.
Due to the numbers being different across the board, Hastings believes that the views are different for other employees of the company. Hastings hasn’t always been a supporter of ads. He enjoys the simple subscription offers that are available and doesn’t like the details that could become confusing if there are several options to choose from, especially if they involve getting companies on board that offer their ads in order to try to keep prices even lower than they are for subscribers. Even though Hastings is a fan of keeping things simple, he also understands that the consumers help control the market and that without the consumers, then Netflix might not be around.
Taking Customers Into Consideration
Consumers should be able to have options when it comes to the TV packages that they want, especially if they want to save money. Companies should also have the option to advertise while making it easy for consumers to follow along with the ads that they see instead of feeling overwhelmed by the number of ads that are shown.
Pricing
Netflix will likely start offering an ad-tiered option for consumers in the near future to see how it’s received before offering more options that include ads. The goal is to offer these options within the next year once the company gains support from companies that would be willing to advertise. There are now three plans for consumers to choose from if they want to subscribe to Netflix. The lowest plan is $10 with the highest plan being right at $20. This subscription includes the option to share the service with more people and includes better picture quality compared to the lower plans.
If Netflix decides to use more ads as a way to reach more subscribers by offering lower prices, then it could result in a turnaround for the company. Jeff Green is the co-CEO of The Trade Desk and looked at the concept of ads for Netflix about three years ago. If there are more options available and with ads being a choice to help lower prices, then consumers will be able to pay the way that they want and will be able to choose the type of subscription they want. This would then help to grow Netflix and could possibly result in more shows and movies being added for consumers. It’s possible that companies could look into spending more money to place ads on streaming services than they do on platforms with videos that are created by users.
Since there is an abundance of streaming options, advertisers are pleased with the possibility of being able to show their content on Netflix and other services as this could result in more revenue for them as well. It’s not the goal of Netflix to change what is seen on TV. However, numerous other streaming services have moved toward offering subscriptions with advertising so that consumers can save money, which has positively impacted those companies, such as Hulu and Disney+.
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