Netflix is in a bit of a rough patch. In Q1 this year, for the first time ever, they lost more subscribers than they gained.
While they still have over 200 million subscribers across the globe, Netflix have come up with a plan to combat the drop in numbers: a cheaper subscription plan that features ads.
There’s not much information about exactly how this would function, but for anyone familiar with streaming television on SBS on Demand, 9Now or 7 plus, it could be that they play a couple of unskippable ads before an episode, and an ad or two during.
For those who grew up watching free-to-air television, the addition of a couple of ads might not seem like too big a deal – you’re probably used to a 3–4-minute ad break and paying less for a couple of ads might seem like a fine deal.
However, Netflix haven’t announced the price difference between the tier which features ads and the tier which doesn’t. There was already a jump in pricing once this year with the introduction of the Extra Member service, and we are unsure if introducing a lower tier will impact prices further.
What we do know is that Netflix have partnered with IT giant Microsoft to work on this ad-supported subscription plan. While the partnership may seem like a surprise to some, Netflix issued a statement which said “Microsoft has the proven ability to support all our advertising needs as we work together to build a new ad-supported offering. More importantly, Microsoft offered the flexibility to innovate over time on both the technology and sales side, as well as strong privacy protections for our members.”
It also doesn’t hurt that Microsoft has a history of strong ad sales through Microsoft Advertising, which serves up ads on Bing, Yahoo, and DuckDuckGo search engines.
Netflix isn’t the first steaming service to offer a cheaper, ad-supported tier, but they certainly are the biggest to date. Unsurprisingly, it seems that other services will follow, with Disney+ already planning on launching their ad-supported tier later this year.
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