Netflix have confirmed it will launch a cheaper streaming subscription service to British households – providing users are willing to watch adverts.
There has been widespread speculation the streaming giant will be the next platform to introduce adverts in the coming year, following a similar announcement by Disney+ in March.
The announcement comes after Netflix lost 200,000 subscribers in the first three months of 2022 and has since forecasted greater losses as competition for streaming services continues to grow.
Streaming giant Netflix have announced a cheaper subscription plan, that will serve advertisements to users, is expected to land in the UK before the end of 2022
Ted Sarandos, co-chief executive at Netflix, confirmed it would begin testing an ad-supported, lower-priced subscription tier, after years of resisting ads on its streaming platform.
The new ad-tier will be a completely new plan for users who are after a cheaper deal and are willing to watch adverts, which could be a good option for households looking for ways to cut back on extra spending during the cost of living crisis.
Sarandos pointed out that although ads are coming, they will only be shown to users on the ad subscription tier, insisting that regular subscribers will not see them.
This is good news for longtime Netflix subscribers, as users will stay with their current plan and not be automatically moved onto the ad-plan, unless they actively choose to do so.
Speaking at the Cannes Lions creative marketing festival last week, Sarandos said: ‘We’re adding an ad-tier; we’re not adding ads to Netflix as you know it today.
‘We’re adding an ad-tier for folks who say ‘hey, I want a lower price and I’ll watch ads’.’
Sandros said that the new offering will be rolled out ‘sooner rather than later’, but explained that the initial version will likely still be open to tweaks.
He said: ‘What we do first will not be representative of what the product will ultimately be. What I want the product to be is better than TV.’
Adverts are slowly becoming mainstream on a range of streaming services, as Disney announced its plan to introduce ads to Disney+ on March 4.
The decision by Netflix only adds to the number of ad-supported streaming platforms in the already crowded streaming sector, with NBCUniversal’s Peacock, HBO Max and Paramount+ offer a blend of subscriptions and advertising.
Reality TV streaming platform, Hulu, initially began as a free, ad-supported outlet before adding subscription plans much later.
NowTV – an offshoot of Sky – shows ads, unless users pay for the £5 ‘boost’ option.
Apple TV+ currently remains ad-free. Prime Video is also largely ad-free, it began showing ads on live sports, while both platforms continue to show advertisements for their own original content between shows and movies.
It also comes as TV viewers could soon be bombarded with even more adverts under plans by the watchdog to change the rules.
Ofcom is to study the limits which govern the ‘frequency and length’ of advertising on broadcast TV and will also consider allowing more product placements in shows.
The move has sparked fears that the UK could descend into a US-style system, which is infamous for constant adverts and the promotion of goods during shows.
At the moment, there is no information about the price of the new Netflix plan, and the specifics such as whether adverts will be displayed on all movies and TV shows, or how frequently they will be seen.
Ted Sarandos said the ads won’t affect current subscribers, adding: ‘What I want the product to be is better than TV.’
A spokesperson for Netflix said that the plan is ‘still in the early days of deciding how to launch a lower priced, ad supported option and no decisions have been made’.
Netflix currently offers an affordable standard subscription plan for £6.99 in the UK.
It is likely that the ad-supported plan could be priced at around £5 per month, potentially saving users around £14 a year on their subscription.
The plan to launch the ad-supported tier is in response to the platforms shrinking subscriber base and declining revenues.
Netflix lost 200,000 users in the first quarter of 2022, falling short of its predictions that it would add 2.5 million subscribers.
Netflix also lost 700,000 members in March following decision to suspend service in Russia after it invaded Ukraine.
And Netflix announced recently it had laid off 300 employees, around 4 per cent of its overall staff, in a second round of job cuts.
A Netflix spokesperson on 23 June: ‘Today we sadly let go of around 300 employees. While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth.
‘We are so grateful for everything they have done for Netflix and are working hard to support them through this difficult transition,’ the company said.
How to save money on subscriptions
There are a number of tricks to save cash on TV subscriptions, including rotating them – by having one at a time, and pausing others, households can save hundreds of pounds. All that is needed is a calendar to remind you to cancel.
Many of the streaming services have cheaper downgraded options, normally without HD, while many also offer free trials.
How to save money on subscriptions: Ten tricks to cut back without cancelling and missing out on your favourite shows or music
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