Netflix to Launch Ads on a Cheaper Plan Starting Next Month
- Three Folio Eddie award wins: 2018 science & technology writing (Cartoon bunnies are hacking your brain), 2021 analysis (Deepfakes' election threat isn't what you'd think) and 2022 culture article (Apple's CODA Takes You Into an Inner World of Sign)
Netflix is the world's biggest subscription video service by subscribers, but it has struggled with an unprecedented drop in membership this year.
What's happening
Netflix is launching a cheaper membership that runs four to five minutes of commercials per hour.
Why it matters
With an explosion of streaming options colliding with tight budgets in a lot of households, price-sensitive viewers now have an option to watch Netflix for at least $3 less a month.
What's next
The new tier goes live in most countries on Nov. 3, about one month before Disney Plus rolls out its own ad-supported, $8-a-month tier.
Netflix ads are coming next month, in a progressive rollout of a new ad-supported membership tier called Basic with Ads in the US and 11 other countries, Netflix said Thursday. In the US, the new tier will launch Nov. 3 and will be $7 a month, $3 less than the cheapest ad-free Netflix option and $1 less than the ad-supported tier that rival Disney Plus will launch Dec. 8.
The new Basic with Ads memberships will go live first in Canada and Mexico on Nov. 1, then the tier will launch on Nov. 3 in the US as well as Australia, Brazil, France, Germany, Italy, Japan, South Korea and the UK. Finally, it'll roll out in Spain on Nov. 10. Basic with Ads will go live at 9 a.m. PT on each launch day, regardless of the time zone of the country where it's launching.
Netflix isn't increasing the prices of its current plans. In one of the only changes to its existing options, the cheapest ad-free plan -- $10-a-month Basic -- will now get 720p HD quality video. Previously, HD-quality streams were reserved for the $15.50-a-month Standard membership. Now Standard gets 1,080p HD quality, while the $20-a-month Premium tier has access to 4K and HDR.
Commercials on Netflix, like on a lot of streaming services, will indicate how long the ad break lasts.
The new tier won't allow subscribers to download anything to watch offline. And while the ad-supported tier doesn't necessarily paywall any parts of the catalog, a "limited" number of titles won't be available to stream because of existing licensing restrictions, Netflix said. Chief Operating Officer Greg Peters told reporters during a press call that roughly 5% to 10% of the library will be unavailable to ad-supported subscribers, varying by country.
The new Basic with Ads will average about four to five minutes of commercials per hour, which will run both before your movie and show starts as well as during the programming at a scene break. It will also have "some very tight frequency caps so that members don't see the same ad repeatedly," Peters said.
Netflix spent years rejecting the idea of advertising on its service. But after it lost members earlier this year for the first time in a decade, the company made an about-face to embrace ads. Netflix's hope is that a cheaper tier, which can charge you a little less each month by making money off the commercials you watch, will help it win back customers.
More streaming advice
- 10 Ways to Save Money on Streaming
- How to Cut the Cable TV Cord in 2023
- See More at Streaming TV Insider
Netflix is changing its tune because of intensifying competition. In the last three years, a so-called streaming war has brought about a wave of new services to take on Netflix, including Apple TV Plus, Disney Plus, HBO Max, Peacock and Paramount Plus. Nearly all of Hollywood's major media companies have poured billions of dollars into their own streaming operations, all chasing what seemed to be unstoppable subscriber growth at Netflix. For people like you, this flood of streaming options has complicated how many services you must use (and, often, pay for) to watch your favorite shows and movies online.
Nearly every one of Netflix's new competitors offers a cheaper or free tier with ads. (The lone holdout besides Netflix, Apple TV Plus, is reportedly considering advertising now, too.)
Advertising isn't the only U-turn Netflix is making. It plans to charge new fees for password sharing next year, with some already being tested in Latin America.