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There is a chance that in the near future Netflix will come to market with a free subscription that does show users a lot of ads. Plans on this are not yet concrete, but are being discussed behind the scenes.

In the news: Although nothing has been officially said about it, Netflix is said to be exploring internally whether it would be useful to launch a subscription in some countries that is completely free, but where viewers are shown ads. That reports Bloomberg.

Netflix and ads

Background: Netflix has a difficult relationship with ads. The company heavily opposed them from its launch. Unlike classic television, their subscribers would not see advertising, provided they paid a monthly fee.

  • However, it has since become clear that that monthly fee may not be high enough, which is why the streaming service regularly raises its prices.

In order to generate additional revenue as well as attract more subscribers, Netflix launched a "Basic with Ads" subscription in October 2022. This subscription costs less than the cheapest subscription up to that point, but still contains advertising.

  • However, it soon became clear that interest in this subscription with ads was not very high. Some advertisers therefore reportedly even asked for their money back.
    • The problem with this is that Netflix still sees ads as an option. Other streaming services like Prime Video offer advertising by default in a lot of countries unless subscribers pay more. Netflix does just the opposite, which has its impact on the number of people who subscribe to Basic with Ads.
  • To remedy that, Netflix has removed the regular Basic subscription in countries that have Basic with Ads. Thus, the difference in price between the advertising subscription and the cheapest subscription without advertising is even greater.

Free subscription?

Meanwhile, ad revenue for Netflix still remains severely below expectations. According to Bloomberg, the company has to make do with $400 million (€373 million) in annual revenue through advertising. That puts it in tenth place among entertainment companies. YouTube, for example, can count on $13 billion (12.1 billion euros) and Disney on $8.7 billion (8.1 billion euros).

However, it is difficult for Netflix to attract more advertisers because they have too few subscribers to show advertising. This also allows the company to offer much less interesting packages to potentially advertisers. These therefore often choose competitors, who often offer extremely low prices.

Two solutions: According to insiders, Netflix sees two ways to solve that problem.

  • The first possibility is to show every subscriber advertising in some way. The streaming service already plans to do that anyway with their live sports, such as WWE and NFL. If that comes to regular series and movies as well, Netflix risks being overloaded with criticism.
  • Another possibility is to introduce a free subscription with ads in some countries. That should create many more subscribers to whom Netflix can show advertising. In the past, Netflix experimented with this in Kenya, but later discontinued that subscription.
    • For now, it is not clear in which countries such a subscription might come. The United States seems ruled out because Netflix has too many paying subscribers there. Large markets with popular free TV channels that show advertising are the most likely. These include Germany and Japan.

© The Content Exchange, source News