A new Netflix’s ad-supported tier will cost users a lot less than current offers. But a new report shows that Americans aren’t eager to pay for a service with embedded advertisements.
Netflix recently announced it’s launching a Basic with Ads subscription plan on November 3. It will cost $6.99 per month, compared to $9.99 for a basic plan without ads and $15.49 for a standard plan, also without ads.
However, a survey of current Netflix subscribers by Attest, a consumer research platform, showed that most of them want the subscription to be free (19.9%). 17.3% said they wouldn’t switch from their current plan.
Of respondents who would be willing to pay for a discounted subscription, most would be willing to pay $5-6 per month (15.5%), followed by $9-10 (12.7%) and $7-8 (11.2%).
At launch, commercials will be 15 or 30 seconds long and play before and during shows and films. On average, it will amount to four to five minutes of advertising per hour.
However, Kantar recently found that free ad-supported video platforms, such as Peacock, IMDb TV, Tubi, and Roku, are growing the fastest.
Netflix won’t be free for now, but some analysts predict that free, not cheaper ad-supported services will start making more and more sense as the streaming giants will massively profit from commercials.
Besides, the Attest survey shows consumers want precisely that – a kind of return to the classic television model, adapted for modern days of streaming.
The survey also indicated that subscription tiering might turn out to be a zero-gain game for Netflix. When Attest asked non-subscribers their thoughts on the introduction of an ad-supported plan, it found that Netflix may add some new subscribers, but at the cost of existing viewers downgrading their current subscription.
This would convert into a negligible net gain in revenue. For example, pricing this new subscription tiering at $5-6 would persuade 18.9% of non-subscribers to sign up, but it would also encourage 15.5% of existing subscribers to switch to this cheaper price point.
The Attest report also indicates that viewers want their chosen platform to air new episodes each week. So far, most episodes of Netflix shows are released all at once, allowing viewers to binge-watch – but 40.1% of respondents said they would prefer the weekly format instead.
Finally, password sharing still appears to be an issue. The survey findings indicate that one in five (22.6%) rely on using a Netflix account paid for by someone else. Netflix tried to address this issue by starting to crack down on account sharing in Chile, Costa Rica, and Peru, where users have to cover extra fees for adding users outside their households.
In Netflix's Q1 2022 earnings report, the streaming giant reported that about 100 million subscribers have password freeloaders. In mid-October, it launched “Profile Transfer" – a new feature that allows a user on an existing account to export their personal data to a brand-new account.
Experts say the company is likely trying to encourage freeloaders who are using shared accounts to start paying for the service out of their own pocket – and make Netflix lose less money.
However, last week, Netflix announced it reversed customer losses that had hammered its stock in the first half of the year. The service added 2.4 million new subscribers from July through September and remains profitable.
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