A few months ago, Netflix announced the arrival of a new subscription including ads. We tell you more about this new proposal of the streaming site whose contours are slowly beginning to take shape.
A new offer from Netflix
It’s no longer a secret: ads are coming to Netflix. That was confirmed by the company’s co-CEO Ted Sarandos at this year’s Cannes Lions industry festival, telling reporters that a new, cheaper, ad-supported Netflix subscription offering is definitely on the way. An announcement that follows months of speculation after the news that the streaming service was losing subscribers for the first time in ten years.
Some internet users have obviously protested strongly against this decision, with many existing Netflix customers vowing to cancel their subscriptions if any form of ads were to appear on the platform in the future.
Netflix: Not only do we charge you, we're making you pay to watch ads.
— Robert Jefferson (@comicsexplained) August 15, 2022
Everyone: pic.twitter.com/mC3ziM3AlW
But the angry mob should put down their pitchforks – ads on Netflix will only appear if new and existing customers opt into the upcoming subscription tier. Plus, these optional ads could turn out to be a good thing for the now declining streaming platform.
What exactly is going on?
Essentially, Netflix wants to tap into an area of the streaming market that its competitors HBO Max and Hulu already enjoy.
“We’ve let go of a lot of our customer base, which is the people who are like, ‘hey, Netflix is too expensive for me and I don’t mind the advertising,'” Sarando said.
Netflix plans to introduce an ad-supported subscription tier for customers who are willing to pay a lower monthly price at the expense of ad-free viewing. This tier will be entirely optional and ads will not start appearing on existing subscribers’ Netflix accounts.
In all likelihood, this new feature should be comparable to HBO’s ad-supported subscription plan on HBO Max, which was introduced on the streaming service last year.
“It’spretty clear that [ce modèle] works for Hulu,” Netflix co-founder Reed Hastings said in an interview. “Disney does it. HBO did it. I don’t think we have much doubt that it works. All of these companies have figured it out, I’m sure we’ll just go in and figure it out rather than [tester] and maybe [faire] or not [le faire].“
It’s not yet clear how much this subscription level might cost, or what parameters this more affordable package might place on content availability, though HBO’s model provides a useful blueprint (for potential customers, as well as Netflix itself).
“We recently announced that Microsoft would be our technology and business partner and we aim to launch this tier around early 2023,” the company revealed in its latest investor report (opens in a new tab).
Not all content will be affected
But even if you’re not convinced that ads can be tastefully implemented, an ad-funded Netflix tier would give the platform much-needed revenue that could – and should – prevent the removal of your favorite shows.
Also, at this time, the company has confirmed that not all movies and TV shows in the platform’s library will necessarily be included in the new offering. Indeed, according to Bloomberg, Netflix does not plan to run ads during original movies, at least not when they first premiere on the platform.
Children’s content could also be ad-free. Netflix reportedly told its partners that it would not run ads during original children’s programming. In addition, some of the company’s current agreements would also not allow it to run ads during licensed content.
In any case, Wall Street analysts expressed confidence that Netflix’s advertising levels will not cannibalize its existing subscriber base. Indeed, the new strategy could result in an additional 4.3 million subscribers in the U.S. and Canada being added to the platform in 2023, and generate a “significant increase” in revenue, Cowen ‘s John Blackledge wrote in a research post this July 8.
