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This changes the brand of Netflix considerably. While many competitors do this (Hulu, YouTube), it's a terrible experience and I've seen both myself and others

This changes the brand of Netflix considerably. While many competitors do this (Hulu, YouTube), it's a terrible experience and I've seen both myself and others simply turn to Netflix to avoid the ads. I think this would break their brand and is more short-term thinking, i.e. "how do we increase value in the next quarter", rather than long-term thinking of how to keep growing as a company.

aidenn0 5y ago
It is also non-trivial to implement in a way that supports older devices; I can't watch ad-supported prime video channels on my BluRay player, which is rather annoying.
giobox 5y ago
> While many competitors do this (Hulu, YouTube), it's a terrible experience and I've seen both myself and others simply turn to Netflix to avoid the ads In credit to YouTube and Hulu, they give you the option to go ad free, or in the case of YouTube pay nothing at all. Have cheap price and ads, or pay a little more and get the ad free experience. I happily enjoy ad-free Netflix, YouTube and Hulu. > I think this would break their brand and is more short-term thinking, i.e. "how do we increase value in the next quarter", rather than long-term thinking of how to keep growing as a company. If you have read the article and try to respond to the authors points more directly, he is making a pretty compelling case as to why this is not short term thinking at all - subscriber growth is effectively over for the company now in the near term, there are little new customer households left to sell a subscription to for Netflix, which is of course why we are seeing more frequent subscription price rises too. On the contrary, he is laying out a long term strategy that may still deliver growth, something subscriptions increasingly won't as subscriber growth continues to inevitably fall. As YouTube and Hulu both prove, one can have ad-supported and ad-free subscription tiers on the same service, and I suspect is likely the path Netflix would follow if they pursue such a plan in future. While as an individual you may not like ads (thats fine!), the slow down of subscriber growth at Netflix is pretty clear and will require a response from the business, which so far has been price rises...
- KerryJones 5y ago
  I did read the article thoroughly, and I think he hasn't seen the larger perspective. I'm an investor in Netflix, and have also dug deeply into many other in-depth analyses of them, and while he says its "long-term", that doesn't mean it is. Netflix has barely tapped its global potential (partially more and more users of countries come online world-wide), and many companies have experienced what they call "demand pulled forward", i.e. extra growth in pandemic that then falls as pandemic heads towards a close. This is short term, and he has assumed that the slow in growth is the "inevitable decline" of Netflix Subscriber growth. Also, to be clear, I think Stratechery is an incredible source and usually agree with him. I don't in this case. I wasn't trying to respond to his points more directly, I was taking on the perspective of what is good for the companies growth. Just because you "happily enjoy ad-free Netflix, YouTube and Hulu." Doesn't mean most do (and there are strong statistical reasons that indicate that others enjoy it more as well).
  - achow 5y ago
    > Netflix has barely tapped its global potential (partially more and more users of countries come online world-wide).. The problem with this argument is it is not thought through. Expanding to newer markets is not about simply enabling credit card payment from those countries. The performance in India (not good) proved recently it is about localizing the content. Creating or buying new content for these new market costs money, and then managing those (staffing up local orgs, local production center, data center, etc.) also costs. Netflix is in content business, unlike software it is not about making copies and distributing world wide at zero cost.
    - KerryJones 5y ago
      achow@ not sure why you think it's not thought through? You're correct it is a content business, they just spent 17 billion on new content, far more than any other streaming provider (and have the subscribers to support it). Specifically in India, with Indian creators, and it worked. It's in their book "No Rules Rules".

aidenn0 5y ago

It is also non-trivial to implement in a way that supports older devices; I can't watch ad-supported prime video channels on my BluRay player, which is rather annoying.

giobox 5y ago

> While many competitors do this (Hulu, YouTube), it's a terrible experience and I've seen both myself and others simply turn to Netflix to avoid the ads In credit to YouTube and Hulu, they give you the option to go ad free, or in the case of YouTube pay nothing at all. Have cheap price and ads, or pay a little more and get the ad free experience. I happily enjoy ad-free Netflix, YouTube and Hulu. > I think this would break their brand and is more short-term thinking, i.e. "how do we increase value in the next quarter", rather than long-term thinking of how to keep growing as a company. If you have read the article and try to respond to the authors points more directly, he is making a pretty compelling case as to why this is not short term thinking at all - subscriber growth is effectively over for the company now in the near term, there are little new customer households left to sell a subscription to for Netflix, which is of course why we are seeing more frequent subscription price rises too. On the contrary, he is laying out a long term strategy that may still deliver growth, something subscriptions increasingly won't as subscriber growth continues to inevitably fall. As YouTube and Hulu both prove, one can have ad-supported and ad-free subscription tiers on the same service, and I suspect is likely the path Netflix would follow if they pursue such a plan in future. While as an individual you may not like ads (thats fine!), the slow down of subscriber growth at Netflix is pretty clear and will require a response from the business, which so far has been price rises...

KerryJones 5y ago
I did read the article thoroughly, and I think he hasn't seen the larger perspective. I'm an investor in Netflix, and have also dug deeply into many other in-depth analyses of them, and while he says its "long-term", that doesn't mean it is. Netflix has barely tapped its global potential (partially more and more users of countries come online world-wide), and many companies have experienced what they call "demand pulled forward", i.e. extra growth in pandemic that then falls as pandemic heads towards a close. This is short term, and he has assumed that the slow in growth is the "inevitable decline" of Netflix Subscriber growth. Also, to be clear, I think Stratechery is an incredible source and usually agree with him. I don't in this case. I wasn't trying to respond to his points more directly, I was taking on the perspective of what is good for the companies growth. Just because you "happily enjoy ad-free Netflix, YouTube and Hulu." Doesn't mean most do (and there are strong statistical reasons that indicate that others enjoy it more as well).
- achow 5y ago
  > Netflix has barely tapped its global potential (partially more and more users of countries come online world-wide).. The problem with this argument is it is not thought through. Expanding to newer markets is not about simply enabling credit card payment from those countries. The performance in India (not good) proved recently it is about localizing the content. Creating or buying new content for these new market costs money, and then managing those (staffing up local orgs, local production center, data center, etc.) also costs. Netflix is in content business, unlike software it is not about making copies and distributing world wide at zero cost.
  - KerryJones 5y ago
    achow@ not sure why you think it's not thought through? You're correct it is a content business, they just spent 17 billion on new content, far more than any other streaming provider (and have the subscribers to support it). Specifically in India, with Indian creators, and it worked. It's in their book "No Rules Rules".