Netflix’s marketing strategy is beginning to take shape with its new advertising plans

The arrival of advertisements on Netflix has been a long-running rumor, which Ted Sarandos, co-CEO of the OTT giant Netflix, has now confirmed.
Sarandos confirmed rumors that were released during the second week of May and said that a less expensive, advertisement-supported Netflix tier is on the horizon.

Netflix is adding adverts to its service after years of refusing to run them on its streaming platform. Speaking at the international ad festival Cannes Lions, Sarandos revealed that the streaming firm is in talks with a number of possible partners to assist ease its entry into the advertising industry. According to reports, these partners include Google, NBCUniversal, and Comcast.

The confirmation of Sarandos comes as Netflix is having a difficult year. The streaming juggernaut lost customers for the first time in a decade as the competition among entertainment services heats up, drew criticism for tightening down on password sharing, and fired over 150 staff members (or about 1.5 percent of its global workforce).

“We’ve left a big customer segment off the table, which is people who say, ‘Hey, Netflix is too expensive for me and I don’t mind advertising,’” Sarandos said. “We’re adding an ad tier. We’re not adding ads to Netflix as you know it today.”

Netflix co-CEO Reed Hastings had telegraphed the advertising plan, suggesting on a first-quarter earnings call in April that ads could be on the way in the next year or two. “Those who have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription. But as much as I’m a fan of that, I’m a bigger fan of consumer choice,” he said. “And allowing consumers who like to have a lower price, and are advertising tolerant, to get what they want makes a lot of sense.”

Netflix co-CEO Reed Hastings had telegraphed the advertising plan, suggesting on a first-quarter earnings call in April that ads could be on the way in the next year or two. “Those who have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription. But as much as I’m a fan of that, I’m a bigger fan of consumer choice,” he said. “And allowing consumers who like to have a lower price, and are advertising tolerant, to get what they want makes a lot of sense.”

By adopting commercials, Netflix hopes to increase revenue. It is not alone either. Competitors like Hulu and HBO Max already provide ad-supported subscription tiers that are less expensive than their commercial-free services, while Disney+ revealed in March that an ad-supported subscription tier would be available in late 2022.

The current Netflix monthly subscription plan allows American customers to use their accounts on one, two, or four screens simultaneously, with rates reflecting the number of screens available and ranging from $9.99 to $19.99. Subscribers who are ready to watch advertisements in exchange for a somewhat lower price will now have a lower-priced choice thanks to the new ad-supported tier.

What Netflix Users Can Expect from an Ad-Supported Tier?

If you’re still a Netflix user, there’s a good chance you’ve thought of stopping at some time.
You might even belong to the group of Netflix users who no longer see the utility in maintaining a relationship with the streaming provider since Netflix raised its fees in early 2022.

However, given that Netflix is introducing a more affordable subscription plan, you might reconsider and decide to reduce, provided you don’t mind being interrupted by advertisements. There is much discussion over the operation of a Netflix ad-supported tier, but we can make assumptions based on what other platforms provide.

HBO Max, Hulu, Paramount+, Discovery+, and Peacock are additional streaming services that provide ad-supported packages. Their $5 to $10 ad-supported plans cost about half as much as their ad-free ones.

Given that Netflix’s cheapest ad-free plan costs $10 per month, an ad-supported tier will likely cost you between $5 and $7. You will most likely see 8 to 23 advertisements every hour under this strategy.