So, Why Is Netflix Adding Ads Anyway?
Netflix’s decision to launch an ad tier was one of business necessity, or, depending on who you ask, animalistic survival. The company lost an estimated 1.2 million subscribers over its first two quarters this year, a disaster which sent its stock price plummeting and contributed to layoffs impacting nearly 500 employees. Publicly, the company blamed these declines on a number of factors, including the prevalence of password sharing amongst its users and the war in Ukraine. Experts, including analysts who spoke with Gizmodo back in May, however, pointed to years of accruing debt as a substantial factor as well. Whatever the actual reason, Netflix found itself on the receiving end of frantic analyst and investor calls to right the ship like never before.
And they’ve responded. So far, Netflix has actually managed to partially recover from its dismal first half even without the new ad tier. Last month, the company reported it added more than 2.4 million subscribers in the third quarter and optimistically projected it expected to add another 4.5 million in Q4. Whether that lofiter projection actually materializes could rely in large part on whether or not the ad supported tier pops or flops.
