As I think everyone agrees on this point, Netflix costs way too much money, especially considering all of their competition now. But instead of lower prices for existing tiers, Netflix’s plan is to create cheaper tiers that serve viewers with ads.
It’s not uncommon in the streaming space, there’s a lot of ad-supported tiers from other streaming services, but it’s not exactly the solution customers currently paying $15-20 were hoping for, as half the reason most of people switched to streaming was the removal of mandatory commercial breaks. Although Netflix will have fewer ads than cable TV, per show.
According to a new report from Bloomberg, we have the possible price for Netflix’s new ad-supported tier, which ranges from $7 to $9. That’s similar to Hulu’s ad-based plan at $7 and lower than HBO Max’s at $10.
Netflix is said to sell four minutes of commercials per hour for the service, which according to the Bloomberg report is “far less than most of its peers,” but HBO Max also says they offer 4 minutes of commercials per hour. It’s less than cable, of course, which is more like 10-20 minutes of commercials per hour.
It’s a strange situation for Netflix, which has long tried to stick with the streaming traditions it started, like ad-free, and if they’re changing course because of their competition, I wonder what else may happen next. Watch too much, so they don’t spend tons of money on shows that people aren’t talking about anymore after just one weekend. I feel like everything is on the table as Netflix looks to stem losses and boost revenue.
Some estimates put Netflix’s potential earnings at $8.5 million from the ad-focused level. Though it’s unclear how many existing Netflix subscribers can switch to that tier from a higher-priced one, as opposed to new customers joining in saturated markets. But of course, most of the money has to come from the ads themselves, and of all places, Microsoft is the one that won the bid to handle Netflix ads. The mega-corporation has a $10 billion advertising business that is rarely talked about, because of course it is.
All of this begs the question of whether time is just a flat circle here, and we’re about to return people subscribed to half a dozen ad-supported services with weekly series that look and cost as much as cable TV in the first place. . The whole concept of the sustainability of the content transmission model has been questioned in recent years, and although obviously we will never literally fully return to cable, expect a lot more ads and maybe less binge-watching in the future.
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