By Panos Mourdoukoutas
Original article published at: https://www.ibtimes.com/why-netflixs-ad-supported-streaming-strategy-missed-mark-3648367
Some anecdotal evidence from a couple of high school classes on Long Island in New York confirms Netflix's dual problem of market saturation and competition. For example, when the class participants were asked, "who has Netflix in this room," almost everyone, including the teacher, raised their hands. A similar response followed when class participants asked, "who has Disney+" in this room?
Market saturation and competition put Netflix in a box at a time when it faces rising competition and higher costs for producing original shows.
The streaming giant cannot expand its viewer base, as no more viewers are left to sign up to spread the costs of the new shows. And it cannot raise prices significantly either, as viewers could switch to the competition.
Still, there's the option of an ad-supported bundle at a lower entry cost to entice price-sensitive viewers away from the competition. But that doesn't work, as this author warned a couple of months ago and recent reports confirm. The new tier missed the mark.
Nonetheless, Dan Goman, Founder & CEO of Ateliere, believes that the flop in the company's ad-supported venture is more of a lack of effective marketing rather than consumer interest.
"It was rushed into production with very little marketing and without the support of seasoned ad sales executives," he told International Business Times. Moreover, he thinks the new offering could have been confusing consumers.
"Netflix is generally associated with a paid subscription, and it may take a more extensive market awareness campaign to educate the consumer on the changes," he explained.