May 23, 2024

Streaming services used to be a haven for viewers to watch their favorite shows directly and not have to watch or skip through ads, but more and more streaming services are taking the profits ads can get them. They have their basic starting price including ads and one or more premium tiers for limited or no ads at a higher price.

Starting in 2023, Netflix will be joining these sites. Netflix still holds strong as the top streaming service by number of subscribers, but it has seen a loss of 200,000 paid global subscribers in the first quarter of 2022, and a decline of 970,000 subscribers in the second quarter.

In an attempt to counteract this loss, and in a bit of a reversal from the typical way companies have marketed this, Netflix is keeping its standard subscription and higher tiers ad-free and adding a lower tier that includes ads to keep the cost down. This change will not affect most people who currently have Netflix, but
people can choose to cut the cost of the streaming service down by switching to the lower tier, and new or returning customers will have their pick between several tiers Netflix offers; its basic plan at $9.99, standard plan at $15.49 and premium plan at $19.99.

Netflix was launched in 1997 as a company that sends its customers DVDs through the mail, competing with in-person video and DVD rental stores such as Blockbuster. However, it quickly rose to prominence when its streaming service launched online in 2007, gathering TV shows from many different companies to give customers easy access to a wide selection at their leisure.

Since then, many companies have made streaming services, and Netflix continued to stay relevant by creating Netflix Originals. Netflix ended the second quarter of 2022 with more than 220 million global paid subscribers, compared to Disney+’s 129.8 million worldwide subscribers and the more than 200 million Amazon Prime members who use their membership to stream, according to
IndieWire.

Early July, Greg Peters, chief operating officer and chief product officer for Netflix, made a press release announcing that they are partnering with Microsoft to work on the new discount tier.

“In April we announced that we will introduce a new lower priced ad-supported subscription plan for consumers, in addition to our existing ads-free basic, standard and premium plans,” Peters said in a press release. “We are pleased to announce that we have selected Microsoft as our global advertising technology and sales partner.”

While this could offer a cheaper alternative to customers and potential customers, some are skeptical about if this is really what people want out of Netflix.

Elise Burt, senior kinesiology and criminal justice double major, said she does not think the lower price with ads will be that enticing to customers.

“I think the purpose of Netflix is you pay to not have the ads, no matter what tier it is,” Burt said. “I think more people will cancel their subscription.”

Grace Eide, sophomore elementary education major, said she thinks the option of a cheaper subscription with ads could be useful, but if people are
trying to save money, they are less likely to take Netflix back.

“I think in this time prices are going up in general, so I feel like some things just have to be sacrificed,” Eide said. “I feel like, for the most part, if people are trying to save money and they don’t feel like they need Netflix, they’re just going to erase it and not go back. Or if it’s like Spotify, which is free and it has ads, that makes sense, and you pay for a premium version without ads.”

While Netflix with ads may not be appealing to everyone, if consumers are looking to cut costs, they can look forward to the release of Netflix’s new subscription tier in early 2023.

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