Wonder if ads actually makes up for the difference or if it’s just under priced to push people towards it.
The ads are almost certainly making up the difference and then some, otherwise I don’t see why Netflix would pursue that strategy at all. The only other theory I can think of is that people are less likely to initially cancel an $8 monthly subscription than a $19 subscription, and are therefore more likely to forget to cancel it in the future.
Like the rest of the tech industry, Netflix is way past the point of making a loss just to drive growth and is now obsessed with driving maximum profits because their shareholders are demanding (or are owed) returns on the big investments they made in a different financial climate years ago. That’s why Netflix is introducing ads, pushing up prices and cracking down on shared subscriptions (and now even a one-off payment to “add” an account member from outside of your household) and cancelling projects with real artistic merit at short notice when they don’t show immediate signs of becoming the next massive hit. It’s all about making as much money as possible now. We are no longer in the age of focusing on providing a reasonably priced and objectively good service and that will drive people back to piracy, just as it has done previously.