During an interview at the Cannes Lion advertising festival, the
CEO of Netflix Ted Sarandos gave the most direct indication that it will launch a cheaper, ad-supported subscription tier to the embattled streaming service.
In essence, Mr. Sarandos said that the company will be “adding an ad tier; we’re not adding ads to Netflix as you know it today.” After the pandemic boost wore out, Netflix hit the skids in terms of subscriber count as people spent less time watching TV shows and movies.
At the same time, new streaming services from juggernauts like HBO, Disney, or Apple, grew to rival Netflix, all the while it kept spending borrowed billions on content creation. Well, that crazy content spending was curtailed, a lot of shows were cancelled, and now Netflix will try and boost subscriber numbers by going downmarket.
Currently, the Netflix plans start from the Basic one at $9.99 per month with SD (up to 480p) picture quality, followed by the Standard $15.49 a month plan that offers 1080p definition, and go up to the Premium Netflix tier at $19.99 per month which includes 4K UHD quality streaming on up to four devices.
Besides cracking down on password sharing, Netflix will likely introduce the new ad-supported subscription tier at something close to the Apple TV+ $4.99 subscription price and will try to recuperate the difference with ad revenue. Or, as Ted Sarandos eloquently puts it:
We’ve left a big customer segment off the table, which is people who say: ‘Hey, Netflix is too expensive for me and I don’t mind advertising,’ We adding an ad tier; we’re not adding ads to Netflix as you know it today. We’re adding an ad tier for folks who say, ‘Hey, I want a lower price and I’ll watch ads.’
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