Netflix Just Got A Whole Lot Cheaper
In an effort to become more competitive in the streaming market, Netflix will now offer a basic subscriber tier that costs $6.99 per month.
The current economic environment has consumers closely watching their wallets. As prices on staple goods rise, discretionary income is getting tighter or even disappearing completely. But thanks to Netflix’s latest news, strapped consumers may still be able to hang on to their favorite streaming service.
Netflix is the largest global streaming service and boasts 221 million subscribers. And they have retained that position despite not offering an ad-based value tier for its customers. However, the company’s disappointing performance this year made its leadership rethink its strategy.
The result is a brand new, ad-based tier similar to what Disney+ and Hulu currently offer. It will officially be available in the United States in November and is priced competitively. Customers will have the opportunity to sign up for this new tier for $6.99/month, which is $1 cheaper than its competitors.
Advertisers are already eagerly jumping on board. According to a media conference call Netflix held, they have nearly sold out of ad spots. Those ad spots will run before and during the show and in 15 or 30-second increments.
But the good news for families is that kids’ shows will initially be exempt from ads. New movies will have the same exemption. This way, Netflix customers can enjoy at least a few months of reprieve if they watch either of those categories.
Everyone planning to make the switch from their current plan (or start joining for the first time) should note a few things. The “Basics with ads” plan will not allow you to download TV shows or movies. Additionally, some offerings will not be available due to licensing restrictions.
Netflix expects that the restrictions may change over time. And those select movies and TV shows will eventually become available. Viewers can also expect to sit through roughly 4 to 5 minutes of commercials per hour.
The other major change accompanying the new plan is the video resolution. But it will only impact customers switching from the existing basic plan. Currently, the standard plan costs $15.49/month and streams at 1080p. The basic plan (which costs $9.99/month) and the new ad-tier option will stream at 720p.
After rejecting the notion of an ad-tier plan, Netflix leadership relented due to the company’s recent challenges. Over the last few quarters, its subscriber growth has effectively plateaued. They lost subscribers for two quarters straight to kick the year off.
And Netflix estimates it will only add around1 million new subscribers globally in the third quarter. The official third-quarter numbers will get released after the market closes next Tuesday. According to CNBC, Chief Operating Officer Greg Peters also plans to unveil the company forecasts for the new service simultaneously.
Peters also expects that the number of users who switch plans will have a “neutral to positive” impact on the company’s financial performance. For that to be the case, Netflix will likely get a fair amount of ad revenue. And ultimately, that is good news for the company.
The new ad tier launches in Mexico and Canada on November 1, Spain on November 10, and in all other streaming locations on November 3. And it is fantastic news for customers, particularly now. But time will tell whether it will help Netflix overcome its dip in subscriber numbers.
