How Will Netflix’s Ad-Supported Tier Affect the Streaming Industry?

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In a world where streaming services are in stiff competition with each other and movie

theaters continue to reel from losses over the past few years, Netflix and Disney have emerged as the companies most poised to dominate the streaming industry. Both companies have significant capital and an extensive streaming catalog, yet the dispersion of fan-favorite content has limited the amount of streaming services people are willing to spend money on. Netflix recently released their ad-supported tier, which lacks features that justify the cost of the standard and premium tiers, such as higher video quality and the downloading ability. With over 5 million subscribers in the last 7 months, the ad-tier is projected to continue growing at a rapid rate. As the ad-tier services continue to grow in popularity, how will it affect the entertainment industry?

Netflix originally launched their ad-tier as a fiscal turnaround for the company. Investors

and analysts alike praised the idea as a way to generate revenue and improve profitability. Seeing the early success of the plan, Disney+ clamored to release their own ad-tier, which they ultimately did in December. With the two largest streaming services promoting the ad-tiers as an affordable way to experience the same content, customers are left deciding which plan to choose. I strongly believe that ad-tier services will be the future of the streaming industry. While ads can be a nuisance and interrupt the flow of an exciting show or movie, the interruptions are worth the $8-10 that customers will save every month. The ability to download content is cherished by many people and is a necessary staple for frequent travelers and others, yet the majority of places have wifi available to use. Customers are also able to get ad-tiers from multiple streaming services for the price of a standard, ad-free plan. For example, the standard with ads plan from Netflix ($6.99/month) and the basic with ads plan from Disney ($7.99/month) combined cost less than the standard Netflix plan (15.49/month). Purchasing ad-tiers across multiple streaming services allows customers to enjoy much more content for a cost-effective price. In the near future, I foresee a large number of households that have multiple streaming services, all with the ad-tiers, and are able to watch Stranger Things one night and Black Panther the next.

As a cost-effective alternative with access to the same content, ad-tier services will

continue to increase their customer base. While there will still be people who prefer higher video quality, the ability to download movies and shows, and ad-free viewing, the ad-tier will appeal to many people around the world and likely be a staple in the households of the future.