People can now pay less for their favorite shows while watching commercials as they get onto their couches for a bit of Netflix.
Netflix has started offering its “Basic with Ads” streaming service in 12 countries, with plans to add more.
It represents a significant shift for the internet behemoth, which helped create the subscription-based, ad-free streaming industry.
But the business had to take action when audiences left because of increased prices and new competitor products.
In announcing the new service, Netflix expressed confidence in having a pricing and plan for every fan.
The new package costs £4.99 per month in the UK and $6.99 in the US, which is about 30% less than the company’s least expensive ad-free option.
So, will they take the risk?
From South West London, Kaitlyn told the BBC she had no plans to change.
The 33-year-old claimed that moving to Netflix was “a desperate attempt to attract more people” that would damage the brand and that she was fortunate to be able to pay the cost of her subscription.
In the first half of the year, Netflix’s member base decreased by more than 1 million as the corporation pushed through its most recent price increases.
Its 220 million global accounts make just a minuscule portion of that, and the corporation recovered those losses throughout the three months leading up to September.
But a recent study by the Simon Kucher consultancy indicated that, especially in areas like China, India, and the US. Over a third of streaming subscribers were likely to cancel a subscription within the next 12 months.
More than a fifth had already taken action to eliminate one, with cost concerns being the biggest motivator.
Dominic Sunnebo, insight director at Kantar World Panel, said that Netflix, with ads, has a chance of helping it retain its audience due to concerns about the rising cost of living. His company’s research has found that quitting Netflix means quitting streaming entirely for many UK households.
To accept Netflix with ads or not?
Enders Analysis researchers, however, asserted that they did not anticipate that a significant portion of the company’s present subscribers would find the savings worthwhile nor that a sizable portion of new customers would be attracted by it.
But while Netflix once set itself apart from the competition by avoiding commercials. Research from Kantar and other organizations indicates that people are becoming more receptive to commercials.
Many of Netflix’s rivals already do so or intend to combine streaming with advertisements. Disney, for instance, plans to launch an advertisement-supported service in the US in December. The monthly price for the plan will be $7.99.
According to Netflix, users of its ad-supported plan would see four to five minutes of advertisements on average every hour.
Since they watch Netflix on family accounts, both 20-year-olds stated they were not particularly concerned about the cost.
Netflix claimed that the new option might be “positive for students” despite promises to push down on password sharing.
New audience for Netflix
But according to a US survey by DISQO, only 25% to 35% of non-subscribers were keen to sign up for an ad-supported service.
Even with a small audience, Netflix might still make money from it.
After Netflix announced its service, there was a “flurry” of interest from advertisers. However, some became “more reticent” when they learned how much the advertising would cost. According to Liz Duff, head of commercial and operations for Total Media.
However, she noted that some people were “eager to participate in the initial launch phase.”
Insider Intelligence predicts that Netflix will make $830 million in revenue from advertisements this year and more than $1 billion by 2024.
Read Also: Netflix reverse subscriber loss in Q3
However, forecasting expert Peter Newman issued a warning, stating that rather than widening the audience base. The new plan will mostly sign up members of Netflix’s current user base.