Starting Tuesday, Netflix will offer a deeply discounted version of its popular streaming service for $5.99 a month. But there’s a catch: Instead of current subscription plans that allow users to endlessly and non-stop take advantage of content to their heart’s content, the new no-frills version with a smaller content library will sprinkle in ads before, after and even during duration of the broadcasts. It’s a throwback to the commercial breaks that pay for programming on conventional television. It may seem strange to see the streaming industry come full circle — from being an alternative to cable packages that bundled 15 minutes of advertising into every hour of content, to returning to a model it eliminated. But it is a sign of how inflation and higher costs have crept into every part of the economy.
Sharing passwords that lose money
The streaming service is also taking steps to crack down on subscribers sharing their passwords with friends, family and even colleagues – a routine practice but not allowed outside the home. Netflix didn’t seem to care too much about password sharing, as the company was growing so quickly that it was certain that anyone who got a taste of its content for free would eventually sign up themselves. But that began to change this year, as high inflation prompted consumers to watch their spending dollars more closely and the company saw back-to-back subscriber losses for the first time in its existence. So, in addition to raising prices for its ad-free subscriptions, Netflix will require subscribers to pay an additional fee if they want to share their password, starting in early 2023. Vincent Georgie, director of the School of Creative Arts at the University of Windsor, says the industry is on the cusp of major consolidation because ‘the average consumer is not going to sustainably maintain two, three, four, five or six different streaming subscriptions.’ (Katerina Georgieva/CBC) “They’re losing a lot of revenue, from all the shared accounts,” Vincent Georgie, director of the School of Creative Arts at the University of Windsor in Windsor, Ont., told CBC News. “They don’t want to lose people completely, they want to push them toward those lower-cost subscriptions.” The ad-supported version of Netflix will cost $5.99 and will only be available on one device, without high-definition content. This is different from the ad-free versions that start at $9.99 per month and go up to $21.99 for subscriptions with all the bells and whistles. Giorgi said the industry is on the cusp of major consolidation because “the average consumer is not going to sustainably maintain two, three, four, five or six different streaming subscriptions.” It’s no coincidence that Netflix is releasing a cheaper, ad-supported version, as millions of people who used to use the service without a subscription are about to be banned from doing so. “If they’re able to capture 60 percent of those users, that would be a good uptick,” Georgie said.
Ads need to be special, says exec
While consumers rarely say they like advertising, some in the industry say it doesn’t have to be that way if it’s done right. Deacon Webster, chief creative officer of agency Walrus in New York, said Netflix would do well to make its ad offering stand out by eliminating such annoyances as repeating the same ad multiple times and creating unique, well-crafted, expensive ads. tailored to specific performances, which is what happens with the Super Bowl. Unfortunately, Webster said, he doesn’t get the impression that’s what Netflix plans to do. WATCHES | Coming soon: A cheaper version of Netflix with ads:
Netflix is bringing back ads with a new, cheaper subscription option
Netflix’s Basic with Ads plan will offer customers a less expensive subscription option if they’re willing to put up with ads. Experts say it’s an attempt to lure price-conscious consumers back to the streaming service. “They don’t have special forms, they don’t allow special sponsorships,” he said in an interview. “They will be bought just like standard network and cable TV ads are bought, so … you’re very likely to see the same ad over and over again, no matter what Netflix tells you to the contrary. “ That’s frustrating for advertisers like him, but for consumers like Hayley Markel, no amount of advertising—even good ones—is attractive. The Leduc, Alta., resident has been a loyal Netflix subscriber for five years and said she doesn’t mind saving money if it comes at the expense of being bombarded with more consumerism. “They’re loud, they’re kind, it’s obnoxious,” she said in an interview. on CBC News. “I can’t stand commercials. “I will continue to pay my regular price or a slightly increased price to not track them,” he said. Hayley Markel of Leduc, Alta., who has been a Netflix subscriber for five years, says she doesn’t mind paying less for the streaming service if it means watching commercials. (Anis Heydari/CBC) Streaming companies and advertisers believe this is not a common view. In the United States, streaming giants such as HBO, NBC-backed Peacock and CBS-owned Paramount Plus have already introduced ad-supported versions, and Disney plans to launch one soon. In Canada, a new service called Pluto is set to launch in December with more than 100 channels of free TV, movies and sports streaming “live” online on a platform that mimics the experience of channel surfing, with ads. Around the same time, CBC will introduce a revamped free-to-air news streaming channel that will be available on CBC Gem and several other streaming platforms. A flagship program hosted by Andrew Chang will be the main attraction, with commercials interspersed throughout the day. While there is skepticism among some, the University of Windsor’s Georgie said people should underestimate Netflix at their peril because the company has a history of innovating and making competitors follow suit. “Netflix will survive, there’s no doubt in my mind,” he said, adding that he thinks it’s possible that some who sign up for the ad-free version will quickly upgrade to more expensive ad-free versions once they see their options. If Netflix doesn’t strike the right balance, its foray into borrowing the TV business model could even lead to the return of another iconic TV experience: the bathroom crush. “Ten minutes of Netflix commercials, I don’t know that I’m going to be glued to my seat,” he joked. “I’d be sitting there but looking at other screens.”
