I’m not sure how this is a mistake, for them to not at least seriously consider an ads tier would be foolish if they’re struggling.
If they are struggling then then should work on quality, improve recommendation, and lower costs. Making a shittier product is only going to accelerate their death spiral.
I used to recommend Netflix to everyone, it was great. Now I recommend to no one. Soon, I’ll probably anti recommend.
An example of something that should be simple is to fix their recommendation engine. The nail that made me quit Netflix was they would recommend stuff I didn’t want to watch. And they would recommend whatever dumb new content they created. And I would find out about new shows on Netflix that seemed interesting to me through my feed on torrent tracker sites.
Netflix knows what I watch. They know what I upvote and downvote. They should be able to predict what I will like and show it to me in a list. They keep showing me stuff I don’t want over and over and that’s dumb and made me quit their service.
And supporting ads and improving recommendations aren’t mutually exclusive, and to suggest the former will prevent the latter is a false dichotomy. How long have you thought that their recommendations have sucked? Months? Years? Always? And in all that time they didn’t improve things to your liking. How does building out an ads tier change that?