Netflix’s new advertising-supported service will be launching in several regions this Thursday. After years of holding back, the decision to go ahead with the tiered ad structure seems to have influenced Disney Plus and others to follow suit.
By selling advertising space, Netflix are able to generate a new source of income while also offering a cheaper service to consumers. This decision comes after its market value halved following a decline in the number of subscribers to the service for two separate quarters.
The ad-service tier will feature the top 85-90% of Netflix’s content, but more niche programmes might be missing. However, it is also possible that certain studios might pull their content from the ad-service.
While certain factors remain unclear, what is for certain is how this move will have profound reverberations in the streaming world. “If you’re Sony, they’re going to take a pound of flesh out,” a media royalties expert commented “It’s like going to a hotel. This [room] has a view of the ocean as opposed to a view of the mountains. You’re going to have to pay more money.”
In the US, this ad-service tier will cost $6.99 a month offering consumers a cheaper alternative amid the cost-of-living crisis. The hope is that this will stop users from cancelling their subscriptions while Netflix recruits the rest of the fee from ad charges.
Aside from the services, this might also have a trickle-down effect for the creators who might also be able to claim a cut of the ad profits made from the content that they have made. All in all, it’s a huge moment in the history of streaming.