The streaming giant Netflix has revealed new plans to introduce a subscription plan with commercials. Initially a video-rental company, Netflix first launched as an online streaming service in 2007. Since then, the platform's film and television show library has expanded; aside from obtaining distribution deals, the platform has also released its own content, known as Netflix Originals. While it has successfully established itself as a leading media provider, Netflix has encountered subscriber and competition issues of late, forcing the company to reevaluate its subscription plans.
Netflix entered 2022 with an outstanding 221.84 million subscribers. These numbers largely translate into billions of hours spent watching original television series and films available on the platform. Its most-watched titles include the retro-themed sci-fi series Stranger Things, whose season 4 release is split into two, the Korean survival thriller Squid Game, the Regency romance Bridgerton, and the Spanish heist drama Money Heist. Meanwhile, Netflix’s biggest films to date mostly comprise ensemble projects such as Red Notice, Don’t Look Up, and The Adam Project.
However, with the rise of competitors like Disney+, Hulu, Apple TV+, and HBO Max, Netflix has suffered from its consumer base’s divided attention and patronage. As such, despite initially advocating against the inclusion of advertisements, recent events have forced Netflix to consider implementing an ad-supported, lower-cost option to its existing three-tier subscription plan. Here is everything we know about Netflix’s intent to add commercials to the platform.
Netflix Has Teased A Cheaper Subscription Plan Including Ads
As of January 2022, Netflix, whose cancellation rule may be causing the platform additional headache, offers three ad-free subscription plans with higher monthly prices. Subscribers who opt for the basic plan now pay $9.99 a month, where they can watch only on one screen and download content on one phone or tablet. On the other hand, the monthly cost of Netflix’s standard plan is now $15.49. With this, users can watch movies and shows in HD on two screens simultaneously and download them on two devices. Lastly, Netflix’s premium plan is now priced at $19.99 a month, enabling consumers to watch and download in HD or Ultra HD on four gadgets at the same time.
However, with the events surrounding the streaming service’s subscriber loss and subsequent problems, Netflix teased plans for a cheaper subscription plan — a lower-priced tier that includes commercials. The news was shared by co-CEO Reed Hastings, who acknowledged the success of Netflix’s competitors like Hulu and HBO Max through this business model. So, even though Hastings was previously adamant against advertising, it appears the company now believes Netflix could benefit from following a similar path. As of writing, the exact cost of an ad-supported Netflix plan is still unknown, but Hastings reassured consumers that the ad-free options will remain available.
Why Netflix Is Considering Adding Commercials
Netflix’s move to add commercials to its existing subscription plans is a potential means of encouraging more subscribers and gaining more profit. In reporting its Q1 earnings for 2022, the media giant revealed its subscriber loss amounting to 200,000. This might be largely related to its discontinuation of service in Russia, which instantly lost Netflix 500,000 subscribers. But Netflix’s subscriber loss and future decline can also be due to the prevalent password sharing among users, alongside the numerous streaming competitors that continuously host original content. Following this news, the stock value of Netflix declined, and the company is expecting to lose up to two million more subscribers by the second quarter of the year.
When Will Netflix Add Commercials?
Hastings first announced that Netflix will figure out how to add commercials “over the next year or two,” allowing the platform to truly iron out the details of such a cheaper alternative. Even so, this timetable is considered “fast and ambitious” and is borne from Netflix’s need to compete with other cheaper, ad-supported platforms. As such, it was recently reported that its employees received word that Netflix aims to launch its ad-supported model as early as the end of 2022 - a lot sooner than initially expected.