Like many streamers these days, Netflix now offers an ad-based tier for subscribers. While this plan is still new to the streaming platform, the company's co-Chief Executive Ted Sarandos explained that Netflix will likely have even more ad-supported plans in the future.
This fall, Netflix released an ad tier that costs $6.99 a month in partnership with Microsoft. In regard to the potential for more plans, Sarandos explained at the USB TMT conference, via CNBC that:
We have multiple tiers today, so it’s likely we’ll have multiple ad tiers over time, but nothing to talk about yet. And the product itself will evolve, I suspect, pretty dramatically, but slowly, gradually.
Currently, the ad tier available is priced just below its competitor's ad tiers, as the article stated, there are also three other plans on Netflix without ads. When the ad plan was announced, there was a misconception that everyone would get ads, however, that is not the case, Netflix simply added another option for subscribers. If people opt into the tier they’ll see about four or five minutes of ads for each hour of content, they can’t download anything and the library of content is limited.
Despite having massive record-breaking shows like Stranger Things Season 4 and the second season of Bridgerton, according to CNBC, Netflix has faced pressure to find new ways to increase revenue since subscriber growth has slowed down.
Netflix’s other co-CEO Reed Hastings, explained last week that the streamer had been wrong about the popularity of ad-supported plans, and admitted that he wished they would have “flipped a few years earlier on.” He also said they’ll “catch up” with their competitors. Based on Sarandos’ comments, it sounds like one way they could catch up is by offering multiple levels of ad-supported plans.
Currently, Netflix has four types of subscriptions. The new ad plan costs $6.99 per month, and it is the cheapest of the tiers. The other three are the Basic plan for $9.99 a month, the Standard plan for $15.49 a month, and the Premium plan is $19.99 a month. So, if they do make other ad plans I’d be curious to see if they create a plan with more ads, that could cause less than $5 per month. Maybe they’d even try to offer a free plan like Peacock does, where viewers have a limited library and ads, but they can still utilize the streamer.
Sarandos also explained that in 2023 they will continue to work on controlling password sharing. According to the article, Netflix published numbers saying 30 million households are using a shared password.
All these new efforts, between the ad plan (and future ad plans) as well as the crackdown on password sharing, is in an effort to keep up with competitors. Hulu, has offered an ad-based plan for a long time, Disney+ implemented an ad tier this month, HBO Max made the move last year, and newer streamers like Paramount+ and Peacock also offer ad options.
So, in the ongoing streaming wars, it makes sense that Netflix is working to one-up its competitors with its new ad tier and possibly even more commercial-based plans in the future.
