Netflix has a cheaper tier with advertising coming.
Netflix, the world’s biggest subscription video service, grew into a behemoth partly thanks to its strategy of making its shows and movies available in ad-free binges. At a time when commercial-packed traditional TV dominated, Netflix pitched itself as the alternative that wouldn’t break the flow of your programming with advertising, nor would it make you wait week to week for your next episode. Building itself into a giant by being the contrarian, Netflix spent years dismissing the notion of advertising on its service.
Fast forward to today: Netflix is the one behind the times. Nearly all of Hollywood’s major media companies have launched their own streaming services to take on Netflix, including Apple TV Plus, Disney Plus, HBO Max, Peacock and Paramount Plus. And as they rolled out, they introduced features that have now become industry norms customers like you expect, including an option to pay less if you watch ads.
Nearly every one of Netflix’s new competitors offers a cheaper tier with advertising. (And the lone holdout besides Netflix, Apple TV Plus, is reportedly considering ads too.) Now Netflix, dealing with its first membership declines in a decade, has reversed course to rapidly ramp up advertising as well.
The company hasn’t formally detailed its plans for ads yet, but here are the main things to know.
Does Netflix have ads?
Not yet. When it introduces ads, the advertising will appear only on a new ad-supported subscription tier.
If you want to keep watching Netflix without advertising, the service will still have the same ad-free memberships.
When will Netflix launch advertising?
Netflix hasn’t announced a date, but the latest reports indicate it could be as soon as Nov. 1.
Not long after the company first indicated publicly it was open to an ad-supported tier in April, the company was reportedly aiming to launch advertising before the end of 2022. Then in July, Netflix itself said that it was “targeting to launch … around the early part of 2023.” But reports since then have said Netflix set Nov. 1 as the launch date.
Will Netflix increase prices when it launches the ad-supported tier?
It’s unlikely Netflix will raise prices for its ad-free subscriptions when it launches its ad-supported option. A price hike is always possible, but Netflix has called the coming membership a “lower-priced” tier.
In the past, Netflx has bumped its prices higher roughly every two years, but lately it has sped that up: Its last price hike in the US was announced in January, which was barely more than one year after the previous one. This quicker cadence may feel like a warning of more hikes to come, but every time Netflix raises prices, it also has to deal with what’s known as churn, or the rate of cancellations. Generally, Netflix has characterized its churn after a price increase as manageable, calling it an “adjustment period” of “slightly higher churn.” But Netflix is so spooked by its existing membership declines so far — including some cancellations this year that were prompted by the latest price increase — that the company is unlikely to tempt fate by raising prices again so soon.
It’s a reasonable question, though: Disney Plus is going to hike prices for its existing ad-free memberships when it launches an ad-free tier Dec. 8.
How much is Netflix now?
In the US, Netflix currently has three tiers of subscriptions at different prices:
- Basic is $10 a month, and it allows you to have one simultaneous stream and one device with downloads. It limits you to standard definition video quality.
- Standard is $15.50 a month, and it allows you to have two simultaneous streams and two devices with downloads. It also unlocks HD video quality.
- Premium is $20 a month, and it allows you to have four simultaneous streams and four devices with downloads. It also unlocks Ultra HD video quality.
How much will the ad-supported tier cost?
Netflix hasn’t specified prices, but Bloomberg reported in August that Netflix is considering a price between about $7 to $9 a month. That’s roughly half the price of the current standard plan, which is the most popular.
By comparison:
- Disney Plus will start charging $8 a month for its ad-supported subscription and $11 a month for its ad-free membership starting Dec. 8. (For now, it charges $8 a month for ad-free streaming.)
- Hulu is $8 a month with ads and $15 a month ad-free.
- Paramount Plus charges $5 for its tier with advertising, and $10 for the ad-free version.
- HBO Max is $10 a month if you watch with ads or $15 a month to strip out all commercials.
- Peacock lets you stream a portion of its catalog free with advertising, while its paid subscriptions — which unlock its full library — are $5 a month with ads and $10 a month without ads.
Where will Netflix launch ads first?
Variety reported earlier this month Netflix’s launch of advertising will start in multiple countries including the US, Canada, the UK, France and Germany, but the company itself hasn’t confirmed which markets will launch ads first.
How many ads will I have to watch on Netflix?
Netflix hasn’t detailed its planned ad load, which is the term for how many minutes of advertising run during an hour.
Bloomberg reported in August that Netflix is aiming to have 4 minutes of ads per hour at first.
By comparison, when HBO Max launched its ad-supported tier last year, it said its ad load would be less than 4 minutes per hour. Disney Plus has said that it’s aiming to average four minutes of advertising per hour for its coming ad-supported tier, too. And Peacock, when it was preparing for its launch, said its ad-supported tiers would have 5 minutes of ads per hour.
Traditional TV networks’ ad load can reach up to 15 minutes an hour.
