Netflix and Amazon Likely To Move towards Ad-Supported Streaming
Subscription services currently dominate the market due to their uncontrolled, ad-free viewing capabilities. However, in the face of growing competition in video streaming services, Netflix and Amazon could now reconsider their promise not to post ads on their service. Many free video streaming services have appeared and have become increasingly popular. The Roku channel offers television shows, movies and many classic cable shows such as ABC and NBC.
The most recent ones like Pluto, with 6 million monthly users, and Xumo, with 3.4 million monthly users, are growing rapidly for subscribers. Hulu offers a cheaper version of its service that shows ads and has 25 million subscribers. Which means that maybe people are reconsidering the price of not having ads and opting for the cheapest versions of streaming networks. Once one has signed up for Netflix, Amazon, and Hulu, they will have to shell out more than $ 30. Price-sensitive consumers view free video streaming services as viable alternatives or a complement to pay services, this is probably the most important factor.
Other Industries Embracing Ad-Supported Services
One more factor could be that many TV manufacturers such as Samsung, LG and Vizio are adding ad-supported applications to their devices, instead of forcing the users to buy separate boxes and plug-ins for their TVs. Amazon recently released a plan to launch a free, ad-supported video service for its Fire TV streaming devices. Netflix has not yet indicated its intention to consider services funded by advertising. However, many industry experts have noted that if Netflix is not for international TV, it could do so quickly by offering a free, ad-supported version.
The Future of Netflix In Dire Straights
With the massive amounts of Netflix-produced programs and films and its intention to create more than 50% original content, Netflix would have a debt of more than $ 20 billion and Disney has removed all of its films from payroll service, By the end of last year to start their own streaming service. Netflix is counting on an increase in its subscriber rate and the company has registered 1.4 million subscribers in the last quarter of last year, which is what they hoped for.
They also increased the subscription cost from $ 11 to $ 13. However, they are still ahead of the game with over 104 million subscribers currently. It comes down to whether people are willing to pay more for Netflix’s original content and no ads, or whether they prefer to pay less for a different service if Netflix continues to increase their costs. According to a survey, 23% of Netflix subscribers said they would drop out of the service if they started running ads. When people ask subscribers what they think is the most appealing features of Netflix, the fact that it’s ad-free is consistently high on the list, according to Peter Fondulas, director of Hub Entertainment Research.
Either service may start offering a cheaper, ad-supported service or advertise on its main service at any time, but it will need to consider the brand’s identity and consumers. In addition to that, they will have to consider the cost of investing in brand new advertising revenue and advertising sales department, which could be costly for both companies, with the risk of losing their subscribers. One also has to keep in mind the fact that Netflix has high ambitions in the world of mainstream entertainment and Hollywood. It plans on being the number one producer of original content and has hopes of taking over giants such as Home Box Office (HBO), Warner Bros. (WB), Paramount, and now also Disney (having become its competitor after separating from it). With its competitors also having ambitions to enter the world of online streaming services, it will have to think of new ways to entice viewers and drive the number of subscribers from all over the globe.