Moving to ad supported product for Netflix is not an easy thing. Netflix is probably on the streaming devices of 90%+ of people who have cut the cord and probably in a good percentage of homes who have not cut the cord. These people pay between $8.99 per month and $12.99 a month (or whatever fee increases. I think it might be $9.99 and $14.99 a month now).
Suddenly, you move to ads, how many of these $9.99 a month people suddenly move to $0.00.
This is different from Hulu that charges something like $5.99 a month plus ads. Maybe Netflix does a hybrid model like this. But I don’t see how this gets Netflix more customers, as they are everywhere anyways. Internationally, yes. It may become a necessity in lower income countries. Then again, the ads will be worth less there as well, but you do what you have to do.
How does moving to ads increase Netflix market penetration in the United States, Canada? Seems it won’t, they are already everywhere. How does moving to ads increase Netflix revenues? Since market share is not going to change, seems to me the only question is how can moving to ads increase Netflix revenues when it has to be offset by loss of monthly subscription fees?
It is not a no-brainer for a Netflix to go ad supported. At least not in the first world countries. Depends on ho much the ads are worth, how many they can run, how many people will put up with it, and will it actually create additional profits?
Clearly subscription revenues are more valuable then advertising is. If not, why do premium channels charge subscriptions and not do advertising? E.g. HBO, Showtime, Netflix, Amazon (through its Prime fees - although Amazon does have a Roku like ad supported solutions as well for certain programming). It seems for a very long time that subscription revenues have been the way premium channels have gone when they easily could have gone ad supported as well. But still, to date, despite the ads that would have sold for a fortune on Games of Thrones (regardless how utterly awful the last episode was…ickkk!!!), HBO still stuck to its basic subscription fees.
I will leave it up to the MBAs and experts at Netflix, but ad supported viewing is not a no-brainer nor inevitable solution. The real world evidences this, despite for decades companies like HBO having such an option.