On Thursday, October 13, Netflix announced it would debut a subscription tier with ads in select countries starting on November 3.
The announcement comes on the back of a reported loss of 970,000 subscribers in the second quarter of 2022 alongside stagnant profits. This has resulted in a 63 percent reduction in the streaming giant’s share price from this time last year.
In an effort to combat this, Netflix will debut a new “Basic with Ads” subscription tier this November. Netflix COO Greg Peters confirmed that the new, ad-supported tier will be priced at $6.99 (Php 412) in the United States—three dollars less than its ad-free basic option.
“The timing is great because we really are at this pivotal moment in the entertainment industry and evolution of that industry,” Peters stated.
“Now streaming has surpassed both broadcast and cable for total TV time in the United States,” he added.
In addition to the United States, the new Netflix “Basic with Ads” tier will also be rolling out in Australia, Brazil, Britain, Canada, France, Germany, Italy, Japan, South Korea, Mexico and Spain.
The ads themselves will last from 15 seconds to 30 seconds long.
“We are looking at a very light ad load with no more than four to five minutes of ads per hour,” Peters said, adding that the company was also implementing “very tight frequency caps” in an effort to keep subscribers from seeing the same ad repeatedly.
When it first launched its streaming service, Netflix initially shunned ads. While the strategy worked as the online streaming audience grew, growing competition from other streaming services that have popped up over the years—on top of growing inflation— has caused the company to acquiesce. (Read: Netflix may launch own video game streaming service next year)
Of course, the question still remains whether the price drop will be enough to let subscribers stomach the occasional advertisement. That said, they may not have a choice as other streaming services are also looking to implement their own ad-subsidized subscription tiers. One of Netflix’ biggest rivals, Disney+ is also expected to launch its own ad-supported tier in the near future.
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