Netflix has always aimed to avoid advertisements. Netflix is, however, seriously contemplating a less expensive plan that is financed by adverts given that the pioneer in streaming is losing members and encountering increased competition from less expensive options.
Following a poor first-quarter earnings report that revealed Netflix lost around 200,000 customers between January and March, the company’s co-CEO Reed Hastings made the statement on Tuesday. After the earnings announcement, the price of Netflix’s stock fell by more than 30%.
“Like Hulu, it would be a planning layer. So, as a consumer, you’ll be able to choose the ad-free alternative if you still want it, Hastings said on an earnings call. And we’ll accommodate you too if you’d want to pay less and don’t mind advertisements.
Hastings pointed out that many of Netflix’s rivals have long provided cheaper subscription packages with advertisements. Netflix has avoided adverts, but it is now contemplating them seriously in an effort to stop the loss of subscribers. Although Netflix withheld concrete information regarding pricing or a potential launch date for the ads-based tier, it may be coming soon.
Hastings said that since the ad model is tested and true for so many streaming services, it wouldn’t need much testing and could be implemented very fast. In the coming year or two, he said, “that’s something we’re looking at and trying to figure out.”
Despite occasional negative feedback on social media, most consumers are quite supportive of ad-supported streaming services. According to a Morning Consult survey, “When given the option, most customers prefer to deal with commercials as long as they can pay less.”
According to the research company, 57% of American respondents chose a low-cost, ad-supported streaming service over a high-cost, ad-free one. Only 14% of Americans said they preferred the pricey options without advertisements, and 25% were undecided.
What Is the Least Expensive Streaming Plan Among Netflix, Hulu, and Disney+?
While the pricing range that Netflix is considering for the ads-based subscription is not yet known, you can get a rough idea by comparing the lowest tier across different providers.
$8.99/month for a solo membership to Amazon Prime Video. A $14.99 per month Amazon Prime Membership also includes Prime Video, which is ad-free by default. (Students can also get an all-inclusive Prime Membership, which includes Prime Video, for $7.49.)
Disney+ is ad-free by default and costs $7.99 per month. (A less expensive tier with ads is also arriving and is anticipated for later this year.)
HBO Max’s standalone base tier with commercials costs $9.99 per month. (Can be added to another subscription service for a lower price.)
Hulu: Ad-supported tier without add-ons is $6.99 per month. (Verified students pay $1.99 per month for this plan.)
Netflix Offers a Basic, Ad-Free Service for $9.99 per Month.
It’s also important to remember that Amazon offers a free, advertisement-supported streaming service called IMDb TV that is separate from Prime Video. (Amazon Freevee will be its new name starting on April 27.)
It would make sense to provide a new plan priced between $6 and $9 for Netflix to continue to compete with Hulu and other ad-based models.
Hastings stated, “Those who have followed Netflix know that I have been opposed to the complexity of advertising and a strong fan of the simplicity of membership.” “However, as much as I support that, I support customer choice more.”
