Netflix plans to introduce an ad-supporter tier, although it is likely to still be at least one or two years away. The adoption of ‘with ads’ plans has risen greatly in recent years with streaming services viewing the cheaper option as an effective way to increase their user base. While Netflix had always remained one of the major services to continue to pass on ads, that now appears to be changing.
Netflix is easily one of the most popular streaming services around but the cost of a subscription has steadily been increasing over time. Anyone signing up to the service in 2022 can expect to pay a minimum of $9.99 per month. If they want a better than SD quality or the ability to stream on more than one device at the same time, the cost increases to a minimum of $15.49 each month.
Netflix today posted its latest quarterly earnings report and during the traditional follow-up earnings call, CEO Reed Hastings confirmed that an ad-supporter tier is very much in the works. The earnings call didn’t provide any firm details on the ad-supported plan, including how much consumers can expect to pay. In fact, the executives on the call were even hesitant to confirm that an ad-supported option would definitely arrive. However, it was made abundantly clear that an ad-supported tier is now the current goal, citing Hulu and HBO Max’s ad-supported options as success stories and proof of concept. It was also confirmed that any ad-supported plan would definitely be cheaper, and that the option to stay subscribed to Netflix on an ad-free basis will remain available to subscribers who want it.
Hastings explained part of the reason was to make the service more accessible. While opening up the service to more people is almost certainly a reason, it is hard to ignore the timing of the announcement. As part of its Q1 2022 earnings, Netflix confirmed that it had lost subscribers during the past three months. Although it’s not unusual for a streaming service to see increases and decreases in their subscriber base over quarters and years, it is unusual for Netflix to lose subscribers. So unusual that it hasn’t happened in years. Netflix had been expected to add more than 2 million new subscribers but actually reported a loss of 200,000 subscribers, bringing the total global number to a little over 221 million.
An ad-supported plan is likely to help with that situation. While the continually rising cost of a Netflix subscription is likely to drive more subscribers away in the future, having the option to downgrade to a cheaper plan will likely appeal to those that want to remain a subscriber but don’t want to (or can’t) pay the current rates. Not to mention, a cheaper entry price may also help to sway any consumers that are currently sitting on the Netflix fence.
Of course, all of this does depend on what exactly the cost of an ad-supported Netflix plan will be, and the limitations involved. For example, if only an ad-supported version of the Basic plan becomes available, and only at a slightly cheaper rate, then the use of ads coupled with limitations on the number of streams and resolution quality could prove less appealing than Netflix expects.
