Netflix has been ad-free on its platform for years, but that could change by the end of 2022. As part of its plans to become a platform where consumers can stream movies and TV shows, Netflix It works at an affordable level for advertising
Ad-supported standards may have different effects on Netflix and its users. Here are the pros and cons of the Netflix-supported tier
Netflix co-founder Ted Sarandos has officially confirmed to the public that it is working on an ad-supported level in June 2022 at the Cannes Lions advertising event. This was after rumors of the company operating at such a level surfaced months ago. The new low-cost ad-supported subscription plan will be an addition to the basic, tier, and premium plans, which cost $9.99, $15.49, and $19.99, respectively.
On July 13, 2022, the streaming platform selected Microsoft as its global ad technology and sales partner, moving the company one step closer to launching its own ad-supported platform. Despite that, according to Greg Peters, Netflix’s Chief Operating Officer and Chief Product Officer, he wrote in the Netflix announcement, “it’s early,” as the company still has a lot to work on.
As such, it’s still unclear how the Netflix-backed plan will work. However, the goal, according to Peters, is to provide “more choice for consumers and a higher value, better experience for a TV brand in advertising.”
The main advantage of the ad-supported rate will be the lower price, which is the main point of Netflix behind its plans. For the broadcasting group, such a plan can help the company to increase the number of subscribers. As of its 2022 report, Netflix has more than 200 million subscribers, although it lost about 200,000 in the first quarter of 2022.
One of the reasons why Netflix is losing customers is the price hike. By the beginning of 2022, Netflix has increased its prices in the United States, Canada, and other parts of the world. Lowering the price could help Netflix retain users who might consider canceling their subscriptions and even attract new users who are sitting on the fence because of expensive subscription prices as long as they can tolerate ads.
Cheap ad-supported rates are not new. Most of Netflix’s streaming competitors like HBO Max, Hulu, Paramount+, Discovery+, and Peacock have cheap ad-supported plans. Following the trend will likely also help Netflix fend off the competition, which has benefited greatly from these plans. To do that, Netflix still has to make sure that its ad-supported rating is competitive enough to attract potential users.
Advertising can be a good way for products and services to sustain and attract more users, but it does not come without its disadvantages. Ads can be intrusive, which is no wonder why some always prefer to avoid them by paying. Depending on how Netflix implements it, the level of ad support may compromise the amazing user experience we’ve come to know and love.
There is also a risk that the company will bring the ads to the basic and standard levels to replace the price that will not increase in the future, especially if the ad-supported level becomes successful. If history is anything to go by, it seems that the price of streaming content on Netflix is always going up. Netflix’s price hikes have become commonplace as the company has had to invest more to produce original content despite stagnant growth. For reference, Netflix’s price has tripled since 2019.
Although this trend is alarming, the company is not alone. Other services, including Disney+, Hulu, Sling TV, YouTube TV, and Prime Video, have also increased in value over the past few years. Therefore, it may not be surprising to see a future where almost all, if not all, streaming platforms are filled with advertising, all in the name of making it affordable for everyone to watch content. online.
With the streaming industry getting more competitive by the day, Netflix is betting on investing more in original programming. That investment must be recouped by increasing subscription fees or adding more paying customers. It seems that Netflix has exhausted the first option, and it has been difficult for the company to grow or maintain subscription numbers.
Launching a cheaper advertising-supported platform can help a company retain its customers and attract more while still making up the difference by allowing other companies to run ads on its site.
