Netflix Has Confirmed That Subscriptions Will Begin To Contain Ads

Although recently we could see how Netflix’s CEO Reed Hastings expressed his opinion in interviews and various media articles that the well-known streaming service should not fill its subscriptions with ads and commercials, these days the complete opposite has happened. Netflix has officially confirmed that ad-supported subscriptions are coming, and the same is likely to happen by the end of this year or the beginning of 2023.

However, there is no need to panic – Netflix advertisements will only appear if you want them to. Let’s explain.

Months of Speculation Got a Final Outcome

What was kept in secrecy, has finally come out: Netflix will start running adverts.

At this year’s Cannes Lions business conference, company co-CEO Ted Sarandos assured reporters that a less expensive, ad-supported Netflix layer is unquestionably coming. The disclosure comes after months of rumors—the prospect of Netflix advertisements was mentioned back in March—and reports that the streaming platform is losing members for the very first time in more than ten years.

As is customary on the Internet, certain social media communities have erupted in opposition to the decision, with many current Netflix subscribers promising to terminate their subscriptions if any kind of advertisement appeared on their version of the streaming service now or in the future.

However, the irate crowd should throw aside their flaming torches because Netflix commercials will only be seen if both new and current subscribers choose to subscribe to the future subscription tier. Furthermore, we believe that these optional advertisements are excellent for the future viability of the platform. Here is an explanation:

What Exactly Is Going On?

In essence, Netflix wants to profit from a sector of the streaming market where its competitors, like Hulu and HBO Max, are already profitable.

When questioned about the business’s decision to embrace advertising, co-CEO Sarandos noted at Cannes Lions that they had overlooked a sizable customer demographic, namely those who claimed Netflix was too pricey for them but did not mind advertising. Therefore, Netflix is implementing an ad tier but not to Netflix you are accustomed to. For anyone who claims they desired a lower fee and would watch commercials, that is for whom they are launching an ad tier.

As a result, Netflix intends to launch a membership level that includes ads for users who are ready to pay a lesser monthly fee in exchange for ad-free viewing. Ads will not start showing up on the Netflix accounts of current users – it will be completely optional.

Ads will not start to display on the Netflix accounts of current subscribers – we will repeat that.

HBO Max’s own ad-supported tier, which debuted on the service last year, will most likely be comparable to Netflix’s ad-supported tier. Disney plans to provide a comparable product on Disney Plus later in 2022.

It is quite obvious that this strategy is employed by Hulu. Disney also practices it. HBO carried it out. They don’t seem to have many doubts, according to Sarandos. Since all of those businesses have already figured it out, Netflix is confident that they will not test it first before deciding whether or not to implement it.

The Cost of Ad-supported Subscription

Although HBO’s approach serves as a useful guide, it is yet unclear how much Netflix’s ad-supported subscription tier would cost or what restrictions this less expensive bundle might have on the availability of content either for prospective clients or the service itself.

The same selection of films and TV episodes are available to HBO Max customers for $9.99 per month, albeit subscribers are not allowed to download content for watching offline or streaming it in a resolution higher than 1080p.

Disney’s ad-supported tier’s price has not yet been made public, but we expect similar restrictions to be put on the content that users can access. Disney Plus executives have stated, however, that the streamer’s advertisements will be limited to four minutes per hour of programming and will not be shown to young children using the platform’s kid-friendly user profiles. If Netflix wants to keep up with its biggest rival, it would be smart to adopt this rigid stance.

Currently, Netflix executives have only affirmed that an ad-supported membership tier, one supported by a collaborative effort with Microsoft, is coming to the service. They have also stated that not all of the streamer’s movies and TV shows will inherently be part of the new package; however, Netflix is in discussion with the studios about some titles that wouldn’t be included.

They have not yet provided pricing information, frequency of ad appearances, or length of commercial breaks. When we have more information, we will let you know.

When Will This Tier Be Ad-supported?

According to Netflix executives, this ad-supported option will not be available until 2023.

They just named Microsoft as their sales and technology partner, and they plan to introduce this tier in the first several months of 2023.

For a fee, optional advertisements will start to appear on the streamer throughout February and April of 2019.

Could Netflix Advertisements Be Advantageous?

Yes, in our view. The move would provide customers who would rather pay a bit less for Netflix at the price of ad-free viewing more options. Netflix’s decision to accept commercials is, of course, driven by a desire to better the company’s finances.

Netflix has the chance to execute advertisements the correct way, both in regards to the types of advertising aired and the viewers exposed to them, given how unobtrusive Disney’s equal ad-supported tier seems.

As Netflix enters this new realm, they intend to maintain their renowned, unwavering attention to user experience. Some people associate digital advertising with flashy banner ads, pointless advertising, and intrusive pop-ups, but Netflix is in a unique position to take advantage of new technology to ensure that advertisements not only benefit the bottom line but also satisfy customers with a customized experience and genuine value.

Netflix will be able to dynamically match ad demand to it if it uses sophisticated analysis to determine the significance of its content, including its topics, verticals, and style. In other words, Netflix should try to present advertisements that are pertinent to the episode or movie they are shown while.

Even if you disagree with the premise that commercials may be used discreetly, an ad-supported Netflix grade would bring in much-needed cash for the streaming service, which might – and should – prevent your favorite series from being canceled.

As soon as Netflix releases its new ad-based policy, many predict that its subscription rates will soar once more. We believe the streamer’s cash flow issues will soon be resolved, even though it will take greater scale (more members) to reach comparable revenue levels to those it may have had with filled-to-the-brim subscribers.

If given the chance, many customers will accept commercials, as HBO Max and Paramount Plus have shown; after less than a year, the latter’s user base is approximately 30% ad-supported. Therefore, even though the phrase “advertising on Netflix” appears like a greedy monster raising its ugly head, we believe the change will be advantageous for all the advertisers such as, streaming service, and its irate customers.

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