This week has proved a significant one for Netflix in terms of the future of the streaming platform. This as the company intimated in an earnings call that the sharing of account access could soon prove a problem.
While we are still to see whether Netflix goes down the MultiChoice route and limits sharing, another aspect of said earnings call also piqued our interest, with CEO Reed Hastings noting that the streaming platform is actively exploring an ad-supported subscription plan.
While much of the Netflix allure has been built on the fact that subscribers can binge watch without ads interrupting the viewing experience, Hastings is also acutely aware of the fact that a cheaper subscription plan that does feature ads, could garner more users for Netflix.
Growth is also a key consideration for investors, as we saw prior to and in the early months of the pandemic a couple of years ago.
“Those who have followed Netflix know that I have been against the complexity of advertising, and a big fan of the simplicity of subscription,” he explained.
“But as much as I am a fan of that, I am a bigger fan of consumer choice. And allowing consumers who would like to have a lower price, and are advertising-tolerant, get what they want, makes a lot of sense,” Hastings pointed out.
The CEO also singled out some of Netflix’s competitors and the seeming success that such an ad-supported model is having.
“It is pretty clear that it is working for Hulu, Disney is doing it, HBO did it. We don’t have any doubt that it works,” he said.
“In terms of the profit potential, definitely the online ad market has advanced, and now you don’t have to incorporate all the information about people that you used to. We can stay out of that, and really be focused on our members, creating that great experience,” he continued.
While Hastings did not draw a line in the sand as to when an ad-supported tier would be coming to Netflix, he did note that finalised plans could be shared within the next year or two.
Either way, Netflix is actively exploring options to bring more paying viewers to its platform.
