Netflix ads are coming, here’s how the new subscription tier will work
Netflix is undeniably one of the biggest streaming services in the world, if not the bigger. But everything peaks at some point, which Netflix did in its first quarter, reporting a profit loss for the first time in more than a decade. What is Netflix’s solution to curb this drop in subscribers? An ad-supported subscription level.
Does Netflix add ads?
So what’s the deal with ads on Netflix?
So far, the streaming service has created a binge-able content marketplace with no commercial breaks or ads on the platform.
That’s about to change as the streaming giant announced in April that it would introduce a cheaper subscription tier that includes ads.
The company committed to the idea after recently revealing that it had chosen Microsoft as its global technology and advertising sales partner.
“We are only at the very beginning and we have a lot to do. But our long-term goal is clear. More choice for consumers and a premium, better than linear TV brand experience for advertisers. We are excited to work with Microsoft to bring this new service to life,” Netflix COO Greg Peters said in a statement.
Another caveat about the ad-supported streaming tier is that it will not include all shows and movies on the Netflix platform. This primarily applies to content the streamer has licensed, not Netflix Originals.
Netflix CEO Ted Sarandos said on an earnings call (via Deadline):
“Today the vast majority of what people watch on Netflix, we can put it on the ad-supported tier. Some things don’t work and we’re in talks with the studios, but if we launch the product today, members of the ad tier would have a great experience. We’ll be removing some additional content, but certainly not all, but don’t think that’s a big holdback for the company.”
The level is expected to launch on the platform as early as early 2023. Netflix plans to roll it out to a handful of markets where ad spend is significant first.
How will ads on Netflix work?
To be clear, ads will not be implemented in your Netflix subscription at your current level.
Instead, what will happen is that Netflix will create a new, cheaper subscription tier to appeal to those who want to pay a lower price.
Netflix Australia’s cheapest tier is currently $10.99 and goes up to $22.99 per month for the top plan. This new ad-supported tier will cost less than $10.99.
Yet we don’t know much about how the new plan will work. Will the ads interrupt the content you’re watching or just appear at the beginning and end? Will they be visible on the Netflix home screen and around the user interface?
There are also issues with private consumer data and how it is used for advertising purposes. Netflix has a very careful algorithm to promote its content to viewers, but can it now also be used for advertising? Time will tell us.
The good news is that if you don’t want to change your current Netflix subscription, these ads won’t affect you in any way.
We’ll keep you posted when Netflix announces further plans for its new ad-supported subscription tier.
The streaming giant is also cracking down on password sharing in response to its lost profits, so be sure to warn any leeches on your account.