When streaming really started taking off, mainly thanks to streaming service Netflix, one of the biggest benefits both people and companies boasted was no ads. Of course, the fact you could choose what you wanted to watch was the biggest benefit, but avoiding commercial breaks was a significant reason many people cut the cord. If viewers didn’t mind ads, there were certainly many free options like YouTube and Tubi, but for years, Hulu was one of the rare services where people had to pay to subscribe to but still watch ads unless they forked over more money. Netflix, however, rebuffed the idea of having a cheaper, ad-supported tier for several reasons: it went against their brand, the cost of implementing advertising, and not wanting to collect even more data from users.
Even as late as March 2022 Netflix treated the idea as a “maybe someday” thing.
But as you know, things change. The pandemic happened, uprooting production schedules and changing viewership habits. More media conglomerates launched streaming services. Company-backed kept getting green-lit and licensed content was often only acquired after long bidding wars. Subscription costs rose to cover these costs, inflation, and to get more profit.
Eventually, for Netflix, their approach of “acquire/product what we want and people will come” came to a head when Netflix revealed in April 2022 they lost subscribers for the first time in a decade in.
The company’s next quarter’s results weren’t as dire as executives predicted, but the company had already announced they were reversing course on one of their biggest stances: Netflix would be launching an ad-supported option.
Now, Netflix-with-ads has been officially unveiled.
Netflix’s New Option
Netflix has had three tiers for years: Basic ($9.99 a month), Standard ($15.49), and Premium ($19.99). Each tier increases the picture quality as well as the number of simultaneous streams and devices that can have offline viewing. As the name suggests, Standard is the most popular.
However, no matter which plan a Netflix subscriber chooses, they still get access to all of Netflix’s streaming catalog and mobile gaming.
Starting on November 3rd (1st in select territories), Netflix will be adding a fourth option in 12 markets including the US, Canada, the UK, and Japan: Basic with Ads.
It is not just the Basic plan with ads playing, however. The two both only allow one device to use the service at a time and streams at 720p resolution, but Basic with ads removes the offline option. Basic with ads also will not have all of Netflix’s content.
This was already known before, but now Netflix has confirmed about five to ten percent of the catalog will be missing on Basic with Ads. Netflix is aiming to reduce that number by negotiating new or updating agreements with the companies behind those shows and movies.
In the US, Basic with Ads will cost $6.99 a month and will play about four to five minutes of ads per hour. Basic with Ads will be available for everyone directly from Netflix, but the company has warned users third-party billing options may not have it available.
The Rise of Ad-Supported Plans
Quite frankly, Netflix’s pricing strategy is brilliant. Netflix made Basic with Ads cheaper than Basic by $3 (30%), but more importantly, they undercut Disney+’s upcoming ad-supported tier by $1. Netflix had also stated their plan with ads may not launch until 2023, but they’re debuting it a month before Disney+ raises their rates.
Disney+ has consistently been one of the lowest-priced streaming options and ad-free on all plans. Disney+ is about to lose the latter moniker, and now they’re going to be undercut by their biggest rival on the former.
True, we still don’t know exactly what is going to be excluded on Basic with Ads, but it seems like Netflix’s original series should be included, which is what’s most important. And I think it will do well. One survey from August 2022 found that the majority of users on services like Hulu and Paramount+ pay for the cheaper ad-included plan, and another analysis from April showed that 35% of new subscribers to streaming services were choosing ad-supported versions. Considering Netflix has long been considered the King of Streaming, I imagine a lot of people will consider (or reconsider) Netflix now.
But as I indicated in the opening, it is a bit funny that consumers are now becoming accustomed to stream shows and TV series with commercial breaks like traditional television service. Not to mention, bundling is becoming popular again.
Whether that’s good because it means more content can be produced or bad because streaming is now becoming more like cable/satellite, I don’t know. For me personally, there are a few things I would marathon if I signed up for Netflix again, and I definitely would chose the Basic with Ads plan since my household wouldn’t have to have multiple streams, offline viewing, or the other Basic-and-above benefits. But I’ve grown accustomed to not having Netflix, and with so many options, I think I’m fine with the services (including satellite) that I have now.
Who knows though. Just a few months ago, Netflix didn’t think they’d be launching an ad-supported version before the end of the year. So who knows what the future will bring for me — let alone how the competition will respond to Netflix’s latest move.