What you need to know
- Netflix is planning a new ad-based tier that will launch in the next two years.
- Netflix is already the most costly subscription service but doesn't have any ads.
- No information on potential pricing has been given.
Netflix says that it will begin to offer an ad-based service over the next year or two according to a new report based on the company's Q1 earnings call.
Citing a move towards meeting consumer choice, Netflix co-CEO Reed Hastings reportedly said that the company would begin offering an ad-supported option despite his personal preference for the "simplicity" of subscriptions. Variety quotes Hastings as saying that he's a bigger fan of consumer choice than subscriptions, however.
The news comes as Netflix works to arrest a worrying slump in subscriber growth. Things have gotten so bad that subscriber numbers are actually beginning to contract — Netflix lost 200,000 customers in the first three months of 2022. The news saw Netflix share prices plummet.
The idea of an ad-based business model isn't a new one and Netflix seems likely to continue to offer an ad-free service for those willing to pay for it. Disney+ recently announced plans for a new ad-based tier while services like HBO Max already use ads to good effect. Apple TV+ is considerably cheaper than most streaming services at $4.99 per month without ads, but not all companies have Apple's deep pockets behind them.
Netflix subscriptions currently start at $9.99 per month for a single HD stream but go all the way to $19.99 per month for up to four streams with 4K support. That's the only tier available to those who want 4K content, something the likes of Apple TV+ and Disney+ offer as standard.
Neither Hastings nor Netflix has said how much its ad-based tier will cost and we don't know when it'll launch, but it's now very much on the streamer's roadmap. Who knows how many customers it will have lost before it becomes a reality, though.
Oliver Haslam has written about Apple and the wider technology business for more than a decade with bylines on How-To Geek, PC Mag, iDownloadBlog, and many more. He has also been published in print for Macworld, including cover stories. At iMore, Oliver is involved in daily news coverage and, not being short of opinions, has been known to 'explain' those thoughts in more detail, too.
Having grown up using PCs and spending far too much money on graphics card and flashy RAM, Oliver switched to the Mac with a G5 iMac and hasn't looked back. Since then he's seen the growth of the smartphone world, backed by iPhone, and new product categories come and go. Current expertise includes iOS, macOS, streaming services, and pretty much anything that has a battery or plugs into a wall. Oliver also covers mobile gaming for iMore, with Apple Arcade a particular focus. He's been gaming since the Atari 2600 days and still struggles to comprehend the fact he can play console quality titles on his pocket computer.
What an insane calculus. Netflix subscribers are going down because of the value equation. When I started watching (and not long ago) it was $8, I quit when it went to $15. Now it's $20. And all without any significant change in programming. Adding advertising is just going to save their profits (temporarily) it won't do anything to stop the exodus of customers. Only lower prices or better programming can do that. It will also *increase* the exodus for anyone like me who won't ever join a service with adverts. I'm going to pay $20 a month and have to watch ads on top of that? Insane! If that's their best idea then their only hope is new management.
"but not all companies have Apple's deep pockets behind them." Apple didn't get those deep pockets by supporting money losing projects.
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