Netflix promises to expand ad-supported subscription offering despite unconvincing audience
Netflix executives remain optimistic about their discounted pricing plan, the Essential Offer with Netflix ads, despite a relatively lukewarm reception from subscribers.
According to one analysis (opens in new tab) Netflix Basic has accounted for just 9% of US subscriber sign-ups since its launch in November 2022, according to ads conducted by research firm Antenna, but Netflix executives assured investors they were “pleased” with the plan’s growth.
The claim comes from Jeremy Gorman, president of the broadcaster’s International Advertising Department, speaking at Variety’s CES 2023 Entertainment Summit (H/T TechCrunch). (opens in new tab)), also said talks are “advancing day by day” to renegotiate content deals that originally did not include AVOD (video on demand) rights.
In other words, the amount of content available to watch through Netflix Basic with Ads will increase. Currently, the cheapest subscription level, which costs €5.99 per month, offers about 85% of the content available to stream properly on Netflix (although almost all the best Netflix series and the best Netflix movies are already included in the plan).
Launching in November 2022, Netflix Essentials with Ads asks viewers to put up with up to five minutes of ads per hour and a 720p video quality limit in exchange for a cheaper monthly plan. Subscribers also cannot download content for offline viewing with this new offer.
The new subscription tier proved unpopular in its original form, with customers and reviewers criticizing its inconsistent implementation of ads and undermining the ad-free ideal that streaming services once embodied.
On the first point, Netflix disagrees. At CES 2023, Mr. Gorman explained that the strimmer is considering a “wide variety of ad types” — “advertising from consumer goods companies, corporate luxury, automotive companies.” [et] retail business” – “it was good for the consumer experience.”
Netflix isn’t the only broadcaster waging an ad offensive in 2023 either. Warner Bros. Discovery will continue to offer a cheaper, ad-supported subscription when HBO Max and Discovery Plus merge into one service later this year, and it looks like Disney’s similar formula will continue with Disney Plus.
Should I subscribe to an ad-supported streaming offer?
Of course, whether it’s worth switching to cheaper streaming deals depends on your personal circumstances.
Sure, it’s not nice to know that your Netflix, Disney Plus, or HBO Max movies and TV shows will be interrupted by up to five minutes of ads per hour if you subscribe to their respective ad-supported plans, but still, these are the cheapest streaming subscriptions we’ve seen yet.
In the case of Netflix, for €5.99 a month, you can still watch Stranger Things, Squid Game, The Crown, Sex Education and Bridgerton at your leisure – you’ll just have to put up with a series of 15 commercials. 30 seconds before and during viewing.
The adoption of advertising by streaming companies is, of course, largely driven by a desire to improve their bottom line, but the shift also offers more options for customers who prefer to pay less for viewing content without ads. For comparison, Netflix’s highest subscription level currently costs €17.99 per month!
Controversy arises when broadcasters raise the price of their ad-free subscriptions to make room for these new ad-supported offerings. For example, while the price of existing Netflix subscriptions remained the same after Essential’s ad-supported launch, Disney Plus prices exploded in the weeks following the launch of the new ad-equivalent subscription.
If Netflix decides to follow the same path in 2023, its executives’ faith in the future of the ad-supported offering may not be so shaky.
