Get All Access for $5/mo

A low-cost subscription to Netflix with ads could have a huge impact on the streaming industry The streaming giant is in a position to develop new advertising options that could revolutionize the industry.

This article was translated from our Spanish edition.

Sean Locke/EyeEm | Getty Images

The drop in the number of subscribers reported last week by Netflix was surprising, even for the company itself, which is reconsidering a low-cost version that includes the presence of advertising. Although the streaming giant has stayed away from that alternative for years, recent statements by its founder and CEO, Reed Hastings , show that they are considering it today. At last week's earnings presentation, the manager explained: "You know I've been against the complexity of advertising and that I'm a big fan of the simplicity of subscription, but as fanatic as I am of that, I'm more fanatical about consumer choice and allowing consumers who want to have a lower priced (subscription) and who tolerate advertising, to get it."

Although Hastings did not speak of an exact date for the launch of this new subscription option, he hinted that it could happen next year. The fact that Netflix, still the leader in streaming platforms, develops a low-cost subscription with ads, it could shock the entire streaming industry. Ash Gangwar, General Manager, TV Partnerships at The Trade Desk , told Yahoo! Finance : "It's huge, not only because of what it means for Netflix, but also because of the impact it will have on the entire television ecosystem. (The decision) is going to force a lot of changes. There is subscriber fatigue at this point."

And is not for less. There are more and more streaming platforms on the market and users have become selective, since for many it is not feasible to maintain the subscription of six or seven services simultaneously. Cheaper subscription options might make them reconsider this option. Both HBO Max and Hulu already offer lower-cost subscriptions in the United States, and a few weeks ago Disney + announced that it is already working on a low-cost subscription that could be available in the United States in late 2022 and internationally sometime in 2023.

In his remarks, Gangwar explains that since their service is currently ad-free and independent of ad revenue, Netflix could experiment and completely change the ad ecosystem for the better: "Netflix can say, 'How do I create the best experience for the consumer?' If that's a 30-second ad, great. But if it's not, they can be creative...Netflix could force streaming services to do things better than they do today."

Regardless of the subscription modalities they develop, streaming platforms must remember that, in the end, what will make a user stay as a subscriber for a long time is the quality of the content . Offering a subscription with ads helps solve the problem, but it's not the whole story. In an effort to compete, streaming platforms offer more and more content, not necessarily of the best quality.

Eduardo Scheffler Zawadzki

Entrepreneur Staff

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Franchise

Kick-Start Your Small Business With These Cost Effective Strategies

Starting a small business is an exciting adventure, brimming with both opportunities and challenges. A key to success is effectively managing costs from the outset.

Side Hustle

'Hustling Every Day': These Friends Started a Side Hustle With $2,500 Each — It 'Snowballed' to Over $500,000 and Became a Multimillion-Dollar Brand

Paris Emily Nicholson and Saskia Teje Jenkins had a 2020 brainstorm session that led to a lucrative business.

Business News

'I'm Shocked': Costco Customers Are Freaking Out About a Change to a Beloved Bakery Item

Costco customers are feeling burnt by a not-so-sweet switcheroo in the bakery department.

Science & Technology

5 Automation Strategies Every Small Business Should Follow

It's time we make IT automation work for us: streamline processes, boost efficiency and drive growth with the right tools and strategy.

Marketing

5 Critical Mistakes to Avoid When Giving a Presentation

Are you tired of enduring dull presentations? Over the years, I have compiled a list of common presentation mistakes and how to avoid them. Here are my top five tips.