People who settle into their couches for a bit of Netflix now have a new option: pay less for their favorite shows but watch with ads.
Netflix has launched its “Basic with Ads” streaming plan in 12 countries – which it intends to expand over time.
It’s a massive shift for the tech giant, which pioneered the world of ad-free, subscription-based streaming.
But as rising costs and offers from new rivals prompt the public to quit, the company had to act.
Announcing the new service, Netflix said it was confident it now had “a price and a plan for every fan”.
It charges £4.99 per month in the UK and $6.99 in the US for the new plan – a reduction of around 30% compared to the company’s cheapest ad-free option.
So are people going to get into it?
Kaitlyn, from south-west London, told the BBC she has no plans to change.
The 33-year-old said she was lucky to be able to afford the cost of her subscription and believed Netflix’s move was “a desperate attempt to get more people” that would end up hurting the brand.
“If they have ads, it feels less like a premium service that people will be happy to keep paying for,” she said, adding that cluttering shows and movies with ads would make of Netflix “just another YouTube”.
But streaming audiences are clearly getting restive.
At Netflix, subscriber numbers fell by more than a million in the first half of the year as the company pushed through its latest round of price hikes.
That’s a tiny fraction of its roughly 220 million global accounts, and the company made up for those losses in the three months to September.
But a recent global survey by consultancy Simon Kucher found that more than a third of streaming customers were likely to cancel a subscription in the next 12 months, particularly in markets such as China, China, and China. India and the United States.
More than a quarter had already decided to cut one, with concerns over cost rankings as the main factor.
With concerns over the rising cost of living, Netflix with ads has a chance to help it retain its audience, said Dominic Sunnebo, global director of consumer insights at Kantar World Panel, who found that for many households in the UK, leaving Netflix means giving up streaming altogether.
“Netflix is entering ad-supported streaming at exactly the right time and we expect adoption to be rapid and significant as consumers fight to take control of their spending,” he said. he declares.
But Enders Analysis analysts said they didn’t think many of the company’s current viewers would find the savings worth redeeming, and it wasn’t likely to attract a large following. new subscribers.
“We find it bizarre that some have opined that there will be a significant amount of Netflix subscribers actively pursuing ad-supported video to save a few pounds a month,” the company wrote in a recent note.
“It goes against Netflix’s (extremely) effective conditioning of its subscription base to see advertising as the ultimate annoyance and to expect nothing less than the cleanest, least intrusive video viewing experience. possible – a strategy that has worked at the expense of all other competitors and laggards.”
But while Netflix once stood out for being ad-free, surveys by Kantar and others suggest public acceptance of ads is growing.
Many Netflix competitors already combine streaming with ads or plan to do so. Disney, for example, is expected to roll out an ad-supported service in December in the United States. This plan will start at $7.99 per month.
Netflix said customers on its ad-supported plan will experience an average of four to five minutes of ads per hour.
“I wouldn’t mind watching an ad if it meant it was cheaper,” students Lottie and Frankie told the BBC.
For now, both 20, said they are not directly affected by Netflix spending, as they are watching on someone else’s account.
With Netflix’s warning about plans to crack down on password sharing, they said the new option could be “good for students”.
Among non-subscribers, however, a survey conducted in the United States by DISQO found that only 25% to 35% were interested in signing up for a service with ads.
Even if the audience isn’t large, it could still prove lucrative for Netflix.
There was a “burst” of interest from advertisers after Netflix announced the service, although some brands became “more reluctant” when they found out how much the ad would cost, Liz Duff said. commercial and operations manager for Total Media, which buys advertising space for major brands,
Others, however, were “very keen to get involved in the initial launch phase”, she added.
Netflix could generate $830 million in ads next year and more than $1 billion by 2024, according to Insider Intelligence estimates.
But forecasting analyst Peter Newman has warned that the new plan will draw most of its signups from Netflix’s existing audience, rather than expanding the pool of viewers.
“An ad-supported tier won’t reverse Netflix’s fortunes overnight,” he said.
Additional reporting by Charlotte McDonald