Netflix’s Ad-Supported Tier Will Be Awful – Here’s Why…

By Richard Goodwin •  Updated: 07/21/22 •  4 min read

Netflix has a new ad-supported tier coming and, as expected, it will be truly, truly awful…


Netflix isn’t having the best of times of late. The company is experiencing its first-ever issues with subscriber retention on account of increased competition from Apple, Amazon, and Disney, as well as other factors outside of its controls – inflation and increases in the cost of living.

So what’s the solution to Netflix’s woes? Ads, apparently…

Netflix’s solution to its current subscriber problem isn’t to reduce the cost of its packages overall, making them more affordable and therefore more attractive to subscribers new and old, nor does it want to improve its service, adding in more content or opening up its largest library (the US one) to the rest of the world, or cut costs or reduce its massive expenses.

But it gets worse. The new ad-supported Netflix tier will ONLY support Netflix Original content, shows like Better Call Saul, Resident Evil, Cobra Kai, and Orange is The New Black. And these shows will be peppered with ads every 10 minutes or so – ads you will not be able to skip.

Users on the INFLATION TIER of Netflix, will not get access to its wider library of content, arguably the main reason why most subscribe and continue to subscribe to Netflix.

Netflix is aiming to launch an ad-supported subscription tier sometime early next year. Microsoft will provide global sales and advertising technology for the venture. A low-cost, ad-supported tier presents specific challenges for Netflix as it will need to deal with extra terms in negotiating contracts with licensors as well as attract and retain subscribers.

AP

Don’t People HATE Adverts, Though?

In some instances, like on this website, and on the internet in general, ads are a necessary evil. They pay the bills and ensure writers get fair wages. But Netflix isn’t a website. Nor is it a TV channel in the traditional sense either; it is a subscription model through and through. Plus, Netflix has been hiking up its prices for years.

But this isn’t even the worst part of Netflix’s new ad-supported tier…

You’ll still have to pay to access the ad-supported version of Netflix. Normally, when a company spams you with ads – like on Spotify’s free membership or 99.9% of websites online – it’s because they’re giving you access to the content for free and making their ROI on the adverts you’re served while consuming it.

It’s not ideal, as we’re all aware, but it is the best we’ve come up with. There’s no such thing as a free lunch, after all.

But Netflix doesn’t seem to agree with this age-old adage, though; rather than do it the traditional way and make access free, Netflix is going to charge you a fee to access its limited, ad-supported tier AND THEN serve you ads as well. Talk about a digital slap in the face.

An Ad-Supported Netflix Will Not Save Netflix

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Netflix’s problems are big news because, up to now, Netflix hasn’t really had any actual problems. Netflix has just grown and grown. The only real sniff of competition its experienced happened inside the last couple of years. And now the streaming platform is in panic mode, talking about bringing ads to its product.

Case in point: Netflix’s profits increased 85% between 2020 and 2021, rising from $2.7 billion to $5.1 billion. In 2022, the company’s cash flow – as of Q1 – rose from $692 million in 2021 to $802 million. And its quarterly profit is still looking healthy despite cutting off Russian users and the fact that millions of its users share account details.

Netflix is too expensive for what it offers, granted, but I don’t think its prices are the sole reason people are leaving. I think it is down to increased competition. And if that is the case, pushing a grossly limited, ad-supported tier is NOT the way to go – especially in its current guise.

When Will Netflix With Ads Get Released?

As for when this new ad-supported tier of Netflix will appear, nothing is yet known. The New York Times got its hands on some internal memos that claimed the service would start rolling out before the close of 2022.

Netflix declined to comment on the story.

My best guess is that Netflix will launch the new, cheaper version of Netflix during Q4 in the run-up to Xmas, as that’s the busiest time of year for streaming platforms.

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Richard Goodwin

Richard Goodwin has been working as a tech journalist for over 10 years. He is the editor and owner of KnowYourMobile.

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