Netflix’s Ad-Based Pricing Tier Might Be More Expensive Than We Thought

There is good news and bad news when it comes to the ad-supported subscription tier that Netflix plans to roll out soon. We’ll start with the good news.

Perhaps the most positive aspect of this new ad-based approach is that the ratio of ads to content on Netflix will be heavily weighted towards content, at least initially. According to a report by Bloomberg, Netflix records only 4 minutes of ads for every hour of content. This means ads at the start of a stream and sprinkled in, but none afterwards, and less overall than competitors.

Better yet, not all content will include ads. At first, at least, Netflix’s children’s programming and original movies will be ad-free. Netflix will include ads in its original TV shows and hopes to include ads in third-party content as well.

According to Bloomberg, “Studios like Sony, Universal, Warner Bros. and Paramount are happy to charge Netflix to put ads on old movies or old TV shows that originally aired with ads. They are less eager to allow ads on newer shows.”

There’s one more piece of good news: Netflix is ​​partnering with Microsoft on advertising, and the companies are pledging to avoid repeated annoying commercials during the same viewing session. Netflix “will not use too much targeting to tailor ads to the viewer. Most people will see the same ads. And Netflix wants to make sure the same ads don’t repeat themselves over and over again.

Anyone who subscribes to ad-supported streaming services like Hulu or Peacock (which also have ad-free tiers) knows how annoying it can be to see the same ad four or five times during a single episode.

The bad news

We’ll start the bad news section with a warning. Unlike Disney, which is increasing the price of Disney+ for subscribers without ads and keeping the current rate for subscriptions with ads, Netflix actually offers a lower price level for its ad-based model.

However, it is reported that this level will cost between $7 and $9 per month and will not include downloadable content, which is too complicated to work with ads.

Depending on the final price Netflix sets, subscribers are looking for an option that is about half the cost of the most popular current subscription (Standard at $15.49/mo) or about half the cost of their premium plan at $19.99/mo.

While that definitely represents significant savings, it’s still potentially high compared to the competition. Peacock offers a free version, an ad-based tier for $4.99/month, and a premium tier that is (mostly) ad-free for $9.99/month.

Hulu costs $6.99/month for ad-supported plans and $12.99/month to remove ad breaks, but I pay $12/month for Hulu, Disney+, and ESPN+, which is clearly a great deal.

In any case, it will be interesting to see how this plays out, what kind of other limitations will exist in terms of screen resolution (only premium Ultra-HD offerings) and the number of connected devices. Ads make sense in a lot of ways, but we find ourselves slowly regressing back to the days of cable in more ways than one.

Now we find more and more streaming content supported by commercials. To watch all the shows, you have to subscribe to so many different services that, at a certain point, it’s like paying for cable all over again, although we have more options and can bundle everything. to the letter and cancel whenever we want.

Depending on where Netflix goes with cancellations and new content, a cheaper ad-supported option may not be too bad. I am currently subscribed to the ad-based Peacock service and the commercial breaks make me almost nostalgic. They can get up and have something to drink or talk to each other for thirty or sixty seconds. It’s still so much better than the 20 minute commercials I used to expect.

On the other hand, if these plans prove popular, we may find ourselves sitting through ever longer commercial breaks in the future. All of this, plus Netflix’s crackdown on account swapping, could put a damper on the entire streaming business and test consumer loyalty.

We will see.

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