Netflix officially confirms what some knew was being discussed behind closed doors for some time, namely, that the company that owns the largest video-on-demand streaming platform will at some point launch new subscriptions that are cheaper, but with ads. We are talking about an important change in strategy that Netflix intends to make, but this is because they want to access a customer segment that has been totally ignored until now.
Netflix says that the idea behind this decision is based on the fact that a cheap subscription, which still displays ads for people watching the content, will be more attractive to those who do not want to pay 8 euros for a normal subscription. The idea is not exactly new, many other video or audio streaming platforms are doing the same thing to give people more options regarding the subscriptions they can activate.
Netflix: The IMPORTANT decision that took the world by surprise
Netflix takes this decision after its growth stopped following the lifting of many restrictions from the beginning of the Coronavirus pandemic, so it is now finding new ways to attract customers to its streaming services. Netflix basically follows the model based on which some television channels also operate, one of the presidents of the company stating that there is still plenty of room for growth for on-demand video streaming.
"We left out a large segment of customers, which are people who say, 'Hey, Netflix is too expensive for me and I don't mind advertising. We add an advertising layer; we don't add ads to Netflix as you know it today. We're adding a tier of ads for people who say, "Hey, I want a lower price and I'm going to watch ads."
We've had experiences where the market disconnects from [our] core business and you have to prove that the thesis still works and will work for the long term. There's a lot of uncertainty in today's world, and if they get something that shakes the foundation of the narrative, they get nervous."
Netflix has carried out multiple price increases for services over the last year, especially in all the important markets in which it operates, and since the growth of subscribers has stopped, it was normal to look for new solutions to bring subscribers to the platform. Netflix hasn't revealed when it plans to launch this cheaper subscription with ads, so we can expect this to happen anytime, although it's clear that the plans aren't finalized.
Meanwhile, Netflix announced the cancellation of certain projects to reduce expenses, and even the dismissal of 300 employees, but it is looking to bring in new subscribers to be able to support its investments in good content in the coming years.