Netflix has been readying a new subscription tier that would be subsidized by advertisements. It appears the subscription will cost less than half of the premium plan. Additionally, Netflix could interrupt streaming with small commercial ad breaks.
Netflix is keen to offer a new subscription tier that would contain ads. The company has traditionally opposed the very idea, but recent developments, coupled with the rising competition, may have compelled the company to rethink its strategy.
According to Bloomberg, Netflix may ask anywhere between $7 and $9 a month from subscribers who are willing to tolerate ad breaks. If this turns out to be accurate, the new ad-supported plan would cost less than half of Netflix’s current, most-popular plan. For $15.49 a month, Netflix offers 1080p streaming on up to two displays with no commercials.
The primary intention behind pricing the plan so low, is to attract subscribers. Earlier this year, Netflix co-CEO Ted Sarandos hinted that ad-supported tiers were “intended to be a gateway tier that gives people a taste at a lower price”. Simply put, Netflix wanted the ad-supported tier to be a stepping stone and not a permanent solution.
The streaming giant is looking to attract consumers who are “willing to watch some ads in exchange for a lower monthly rate”. Incidentally, Netflix has lost subscribers for two consecutive quarters, and this plan could help increase subscriber count.
This is the first time Netflix is offering a subscription tier that will interrupt streaming to show ads. Nearly all of Netflix’s competitors already offer competitively priced plans containing ads. Hence, the company would obviously have to be careful and ensure that ads do not completely sour the viewing experience.
The new subscription tier, which could arrive early next year, would have about four minutes of advertisements for every hour of content. This seems reasonable, but Netflix could easily increase the number of ads in the future.
Netflix has roped in Microsoft as its ad tech and sales partner. Microsoft is responsible for developing and deploying a custom ad-supported platform that will have content from Netflix.
Source: Bloomberg