Why Netflix offers a cheaper subscription with ads

Why Netflix offers a cheaper subscription with ads

Last weekend, Netflix tied the knot. After saying for years that commercials would never appear on the platform, the streaming service is soon going to do it for real.

When exactly we don’t know, but consumers will be able to use Netflix for a lower amount. However, in exchange for that lower price, they will have to deal with advertisements. What is going on at Netflix that is causing this choice to be made? I’ll explain!

What’s going on at Netflix?

Things are not going very well at Netflix. In the first quarter of 2022, for the first time in a decade, it lost 200,000 subscribers compared to the previous quarter. The streaming service still remains the largest with over 222 million subscribers, but it is really facing a problem.

Indeed, the departing subscribers are the result of growing competition in the market. Whereas Netflix undoubtedly put streaming on the map and was autocratic, it now seems to be mostly stuck in old habits. Competitors HBO Max, Disney+ and Amazon Prime Video, for example, are coming out with more interesting offerings and much lower prices. Where you currently spend €15.99 per month with Netflix for a 4K subscription, you can get these previously mentioned services together for €19.48 per month.

Netflix on MacThe streaming service can also be used on your Mac (Image: Pexels)

Because of those competitors, many rights that Netflix had to well-known titles have now expired and have not been renewed. So the streaming service is becoming more and more dependent on Originals, but unfortunately they are not as strong as they used to be. Long story short: Netflix is costing a lot of money, has a less interesting offering and is therefore losing subscribers. Something that also has anything but a good impact on the company’s shares.

Time for action, then.

Cheaper subscriptions with advertisements, so

During the announcement of the first quarterly results for 2021, and thus the drop in subscribers, CEO Reed Hastings made an unusual comment. Netflix was about to throw its biggest promise straight into the nearest trash can. The streaming service did not work with ads and would never do so. Last weekend it was announced that it will do so after all.

Co-CEO Ted Sarandos confirmed last weekend, during the Cannes Lions Festival, that Netflix is coming out with a cheaper subscription. The streaming service will be available for a lower price, but with commercials. Those who want to enjoy watching a movie or series will have to deal with interruptions.

This is something the consumer can choose for themselves, but Netflix vowed never to do so. So exactly how much such a subscription will cost and when we can expect it is not yet clear. But that the streaming service is going to change course may be clear.

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