In 2019, the renowned streaming service Netflix sent a letter to its shareholders explaining it was advertisement-free. The company said, verbatim, this was “a deep part of (its) brand proposition.”
So with recent news, either the brand’s core has shifted or it has abandoned all principles, because as of last Thursday, Netflix has opened the floodgates to commercial ads and unleashed them onto consumers.
Netflix CEO Reed Hastings shocked the world back in April 2022 when he came out and claimed Netflix was opening for commercials. Hastings had, for years, maintained an adamant anti-ads stance. But this shift in business plans came directly after Netflix’s worst-performing period in years.
This trend is also seen through other streaming platforms. We're regressing back to the dual revenue model of cable TV, with streaming platforms obtaining revenue from both subscriptions and advertisements. Other platforms like Hulu, HBO Max, Peacock and Paramount+ have already introduced a discounted membership option with ads.
Remaining competitive with the influx of streaming platforms is, of course, each platform's top priority. Netflix, for example, priced its basic with ads tier $1 cheaper than the Disney+ tier with ads, which will debut in a little under a month on December 3rd.
Fear not, though: Current Netflix users will probably experience no effects of the new plan. Netflix has added new tiers to its business model. The lowest tier is called the “basic with ads” tier. This plan is priced at $6.99 per month and was launched in the U.S. this past Thursday.
Netflix has said that it plans on including an average of 4 to 5 minutes of ads per hour. Ads will be 15 or 30 seconds long and will play before, during and after programs. Additionally, users can only stream on one device at a time, some titles won’t be available on this tier and users are not capable of downloading materials to watch offline. Unfortunately, for users with this plan, say goodbye to watching Netflix airborne on planes of any place without Wi-Fi or cellular data.
Some of the titles excluded on the tier include shows like "Arrested Development" and "New Girl" and popular movies like "The Imitation Game" and "Skyfall."
The next three platforms — basic, standard and premium (priced at $9.99/month, $15.49/month and $19.99/month respectively) — will all remain commercial-free.
For current Netflix users, not much has to change. In fact, Netflix released a statement saying the company does not expect current users to step down a tier — rather, it expects to accumulate more users on the lowest tier.
Despite Hasting’s aversion, one could argue that the writing was on the wall for Netflix. The company has just experienced its worst performance in 10 years. For the first time, it had a net loss of subscribers and witnessed its stock plummet. The company needs to prove to investors it can remain profitable even with this smaller subscriber pool.
Netflix has also released its plan to crack down on password sharing and plans and push people to create their own accounts. It even recently struck a partnership with Microsoft to improve its technology. In 2023, the brand plans on releasing an option to allow users to add sub-profiles on their accounts to monetize account sharing. If account sharing is detected by its software, Netflix plans on prompting users to create "sub-profiles."
This is the reality of living in an increasingly capitalist society. Companies may have values, but the need to keep up with competitors will 99.999 percent of the time override any principle. There is no end to accumulation under capitalism. With the stagnation of subscribers, Netflix is forced to source revenue from other avenues — in this case, ads.