Will it Work?
That depends on who you ask and what you mean by “work.” Laura Martin, a senior entertainment internet analyst from Needham & Company told Time the move to bring on ads could actually harm Netflix’s revenues in the short term, but that that is worth it in order to grow its subscriber base.
Some of those subscribers belong to a growing cohort of entertainment viewers who simply cannot or will not continue to keep paying for an increasing number of separate streaming services. In April, 63% of streaming consumers surveyed by Accenture said they agreed that it’s simply too expensive to pay for all of the subscriptions they want. That’s due in part to an absurdly crowded market of [INSERT NAME HERE] Plus digital adventurers.
To put that in perspective, Insider Intelligence estimates there’s over 200 global streaming services available to choose from. In Q2, 2021, the average adult said they subscribed to around eight different video streaming services, more than double the average from 2016. Growing inflation and changing consumer spending habits could also lead some more money strapped users to cancel another subscription here or there. While those users would simply vanish under Netflix’s previous model, the ad-supported tier gives the company an in to battle over those users.
