Forget ad-supported streaming, Netflix should have focused on pay-per-view

For years, Netflix executives rejected the idea of offering a cheaper, advertising-subsidized service level. But when subscriber growth hit a ceiling and started to decline, they changed their minds.
Wall Street analysts applauded the move, but I think it was a mistake. Netflix should have focused on cost-cutting and finding other ways to lower the cost of its service to consumers. It also is right to crack down on rampant password-sharing on the service.
But an ad-supported service level? No. It should have stayed a commercial-free, premium service like Apple TV+. No one likes ads and offering both ad-supported and ad-free service levels complicates the business and muddies the message for consumers.
Netflix also is wasting money trying to make a large video game service for its subscribers. That never made sense to me.
Netflix is about video content – movies, TV series, documentaries and more. It should stick to its core business.
That said, Netflix is missing an opportunity in the transactional, pay-per-view realm. It has ceded that business mostly to rival Amazon.
When Netflix only ran a DVD-by-mail service, it offered every conceivable movie and TV series. Back then, practically everything Hollywood produced was sold as packaged media and thus available from Netflix. But once streaming took over, the availability of movies splintered across numerous subscription services – Amazon Prime Video, Disney+, HBO Max, Hulu, Paramount+, Peacock and more.
By adding a pay-per-view service, Netflix could return to offering every theatrical movie release available on one platform. Right now, subscribers must switch platforms to do that.
Transactional video rentals isn’t as large an addressable market as advertising, but it doesn’t sully the brand like ads do either.
And as subscription services reduce the size of the content libraries they offer, as HBO Max is now doing, transactional pay-per-view provides a way for consumers to still access those titles.

Photo: Netflix celebrated its 25th anniversary in 2022.