Netflix Rolling Out Ad-Supported Subscriptions, Here’s What They’ll Cost
Netflix is making the next big step for streaming services and adding a new ad-supported subscription option.
Netflix is getting closer to launching its ad-supported streaming service, and thanks to a new report by Bloomberg, we now know what it will likely cost. Lucas Shaw reports that the world’s largest streaming service is eyeing a price point of about $7 to $9 a month, about half of the current rate for HD video and two concurrent streams ($15.49). It would be close to the same price Disney+ is looking to charge for its own ad-supported service launching in December, which will cost $7.99. It would also be cheaper than the HBO Max ad-supported service, which launched in June of this year and costs $9.99 a month.
Deadline reports that the announcement comes as streaming services are facing new challenges, as consumers look to save money during the current economic downturn and more services are competing for subscribers. By the end of the year, the three biggest streaming services – Netflix, HBO Max, and Disney+ – will all offer ad-supported plans, all while Netflix struggles to stay on the streaming throne with its nearly 210 million subscribers. In a statement, Netflix denied the reported details, saying they are still in the “early days” of decision-making on the service.
The report states that Netflix is looking to add about four minutes of ads during each hour of programming, with ads running before and during programs, with no ads running afterward. That’s fewer ads than viewers see during a half-hour of broadcast television (which is often five to ten minutes of ads), but slightly less than what viewers of the ad-supported Paramount+ service see per hour (based on our observations). The new discounted service is expected to debut in six select markets between October to December of this year, with a full roll-out nationwide next year.
Not only does Netflix find itself in a heated competition with numerous services, many of which did not exist five years ago, but it is also struggling with subscriber losses. It lost nearly a million subscribers in the second quarter of 2022, which is actually good news, as they were expecting to lose as many as two million subscribers. Recent controversies with Netflix programming and a recent rate hike didn’t help. With summer over and no big-name premieres like Stranger Things to lure in viewers, Netflix will need an edge to remain competitive against Disney+ and HBO Max. Hence the cheaper, ad-supported option.
Once upon a time, streaming services sold themselves on the concept of watching programming without ads, at rates much cheaper than cable, which viewers loved. However, with more streaming services taking their bites out of consumer budgets, households are often finding themselves paying more than ever for TV services. In addition, free streaming services like Tubi, Roku, Pluto, and Freevee have become popular options and changed viewer attitudes towards ads on streaming services. Netflix had long dismissed the idea of ever running ads on their platform, but with HBO Max and Disney now nipping at their heels, change came quickly. Bloomberg estimates the new service will generate over $8 billion a year in revenue within five years, which is welcome news for the streamer, which has cut back on its recent billion-dollar spending spree to create new content.