Will Ad-Supported Netflix Work Out?
As part of its strategy to encourage more people to get started with Netflix, the company unveiled an ad-supported version of the app today. The move brings a totally new experience to the service the invented the idea of paying for a huge library of on-demand titles and viewing them without commercials.
The idea behind the new version of the service is that the advertisements will allow the company to offer content for a smaller monthly fee than it otherwise charges.
Separate and Not Equal At Launch
Netflix is dealing with a pretty substantial problem at the launch of the ad-supported tier. Its agreements with its content partners did not include a formula for how things would work with advertising included. While it has worked out agreements with some of its partners some key players are not worked out. And those partners include the biggest names in the business; Disney, NBCUniversal, Sony Pictures Television, Warner Bros. Discovery, and Lionsgate.
It should be noted that many of these same companies have their own ad-supported services that allow them to monetize their content directly with Disney looking to launch its own ad-supported version of Disney+ in December. Netflix in its haste to get a new offering out may have tripped right into the kind of sloppy start that could haunt it as consumers often don’t pay attention to the followup. From here on out millions of people may say that the ad-supported tier does not include all of the content even if the issue is worked out.
Netflix has high expectations for the new tier. Its next two earnings reports should be highly anticipated.