Several news outlets reported that Netflix will launch a cheaper subscription starting on November 1. The same sources claimed that Netflix will use the budget-friendly option to attract audiences, especially those who haven’t subscribed to Netflix before, as well as those who want to maintain subscriptions to multiple streaming platforms. However, a spokesperson for the company recently told Deadline that the company is “still in the early days of deciding how to launch a lower-priced, ad-supported tier, and no decisions have been made.” Despite shooting down the rumors that the ad-supported subscription plan is coming in November, representatives from Netflix have not dismissed the notion that the company is exploring it as an option. There are reports that Microsoft has already been hired by Netflix to serve ads on its platform.
Netflix loosening grip at the top of the streaming space
Globally, the video streaming service market was worth around $60 billion in 2021. The market is expected to grow by 21% annually and reach a value of $330 billion by the year 2030. However, Netflix has seen its new subscription numbers decrease in recent years. In 2021, the company had 18 million new subscribers which is less than half they 37 million new subscribers it obtained in 2020. Earlier this year, Netflix reported a substantial subscriber loss, a first in a decade. Just a few months later, Disney’s multiple streaming platforms now have a higher combined total of active subscribers than Netflix. Netflix could help stave off the inevitable temporarily by introducing a more economical ad-supported subscription plan.
Streaming is still king
Studies have suggested that 85% of US households have at least one streaming service. This is in contrast to the 67% of households in the US that own cable TV subscriptions. But, only 55% of streaming service users have ad-supported subscriptions. A recent survey suggests that 53% of current subscribers would be willing to have advertisements in their streaming service if it meant lowering costs. According to the research, 46% of users would consider subscribing to a new streaming service if the cost was low enough. 33% of subscribers would also consider adding a new subscription if the content is not available elsewhere. Looking at the numbers, a low-cost ad-supported subscription plan would bode well for an industry giant like Netflix. A Wall Street Journal article suggests that a price of $4-$7 would be ideal to attract more budget-conscious subscribers to Netflix. Revenue from streaming ads on the platform could earn Netflix as much as $1.2 billion by the year 2025 if it decides to roll out the plan soon. The announcement that Netflix has partnered with Microsoft for an ad-based subscription plan confirms the company’s intentions. The only question now is when will Netflix start implementing it.
