Along with the recent news of charging fees for password sharing, Netflix is now considering launching a cheaper ad tier system along with certain modifications at the end of the year 2022. By introducing this feature, Netflix underwent a series of trade-offs and opportunity costs as well. Netflix has informed its employees of this change, but only a handful of details have been released till now. This ad support tier system isn’t fully operational as of now, but hopefully, by the end of the year, it will be implemented all over the world. This new strategy might be a response to the password-sharing feature, which has recently been released by Netflix and has faced huge criticism from users worldwide. Netflix hopes that this news has the potential to attract more people to it and thus regain its commitment.
However, starting an advertising campaign for this new and cheaper ad support tier system will require an entirely new team to implement it successfully. Currently, Netflix doesn’t have an ad sales force. Therefore, it is now in a position to either build up a whole new team of employees, provide them with training, and engrave them with the core concepts of this idea, or establish a partnership with any other company that is already practicing this idea. Now it has to decide on a strategy to select so that it can be implemented successfully by the end of this year.
Furthermore, Netflix is currently employing its password-sharing subscription charges in Chile, Costa Rica, and Peru. Due to this strategy, Netflix suffered a huge loss in its subscribers; i.e., it lost around 200,000 subscribers, which has put this video streaming app at risk for future considerations. At the same time, its competitors analyzed an increase in sales and subscribers recently, thus generating a huge amount of money in accordance with the above strategy. Apple TV Plus, HBO Max, Disney Plus, Peacock, Paramount Plus, and Amazon Prime have seen a recent surge of subscribers as a result of a password-sharing approach.
To put it another way, Netflix says, “The streaming service also highlighted that “every major streaming company excluding Apple has announced an ad-supported service.” To facilitate its users, it will provide “lower-priced options.” The planned changes would be reasonable and would probably draw a huge user base.