How Netflix’s AVOD Push Could Influence Streaming at Large

After recent subscriber losses and a steep stock drop, Netflix is reportedly exploring an ad-supported strategy

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June 22, 2022

When Netflix plunged head-first into the streaming game in 2007, the company immediately set a lofty standard for other platforms to follow. Today, at a critical juncture in the OTT leader’s existence, Netflix finds itself considering whether to follow the lead of others.

At a time when most streaming providers already offer an ad-supported model or tier, or are now making moves to do just that, Netflix is calculating the repercussions of breaking a long-held promise. Since the company first embraced the streaming model, Netflix has staunchly refused to include advertisements in any form on its platform. In a 2015 Facebook post, co-founder Reed Hastings planted a flag: “No advertising coming onto Netflix. Period.” As recently as 2020, Hastings remained publicly committed to an ad-free model, telling Variety: “That remains a deep part of our brand proposition.”

But after recent subscriber losses and a steep stock drop, Netflix is reportedly exploring an ad-supported strategy – which could not only stop the bleeding for the SVOD giant, but also set an AVOD template for other platforms still searching for the right blend of subscription and ad-supported offerings. How might Netflix’s next steps influence the streaming industry at large?

The Current State of Streaming

Netflix isn’t the only SVOD platform engaged in corporate-strategy soul-searching. Economic conditions and competition in the streaming space have created an imperfect storm for subscription-based streaming platforms, leading to churn and outright cancellations as viewers tighten their belts and take a peek at other OTT providers and formats – including AVOD and FAST.

Because these models tend to be cheaper than premium SVOD services (or completely free) and they allow viewers to avoid a sign-up process and a commitment to sharing their information, they provide an intriguing alternative to subscription-based platforms. And because the variety and quality of content continues to improve as the space matures, AVOD and FAST have obvious appeal to viewers exploring their streaming options.

How Netflix Can Remain a Streaming Leader

Although the up-and-coming AVOD and FAST providers pose a threat to the subscriber numbers and brand equity of OTT’s old guard, Netflix has advantages that, if it is swift and decisive in its actions, can ensure the company’s position as the preeminent leader in the streaming space.

First and foremost, no current AVOD or FAST provider can compete with Netflix’s financial and production resources. With the infrastructure of a more viable option for content delivery already in place, Hastings and company have the ability to elevate AVOD to an even higher level of quality and position Netflix as the top ad-supported platform in the streaming space.

AVOD isn’t what Netflix aimed for – in fact, the company made quite a show of running away from an ad-supported strategy for more than a decade. But today is a new day. If Netflix opts to build in a free, or more cost-effective, advertising-fueled version of its current platform, consumers will undoubtedly be interested. The company has the brand recognition to attract strong ad partnerships and the muscle to deliver the best AVOD experience in OTT. And with Netflix setting that bar, competitors will be pushed to do more and better – all of which adds up to a win for consumers. 

At the end of the day, viewers won’t care about Hastings’ past declarations of keeping Netflix advertising-free. They’ll be too busy appreciating their luck in finding a great, affordable streaming platform where they can watch their favorite shows and movies.

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