Netflix’s ad-supported tier available in November

Keeping its promise to offer such an option before the year is out, Netflix announced that its much-talked-about, most affordable, ad-supported subscription tier will be made available to consumers of 12 countries on November 3 for $6.99 a month. The company calls this “Netflix Basic with Ads” and will be offering it alongside the subscription tiers already available: Basic, Standard and Premium. The countries where Basic with Ads will be available first are Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, the UK and the US, with more presumably following in 2023 and beyond.

Netflix made a few things clear regarding its new monthly subscription plan: consumers going with that instead of the three already available will be watching all content at 720p, will not have the option of downloading anything for offline viewing and will not have all content available to them because of licensing restrictions (Netflix’s wording implies that the company will make an effort to minimize the impact of the movies and TV shows not offered on its catalog). Everything that Netflix itself has produced will be available to all tiers, obviously, but the 720p-resolution and no-downloads limitations will still apply to that content too for Basic with Ads subscribers.

A lot of people can live with these two limitations, most probably, but… what about those ads? We may have to wait until the new plan is available to find out how they affect the Netflix viewing experience as a whole, but the company promises no more than “an average” of 4–5 minutes of ads per hour of content watching. This is way less than the duration of ads per hour usually served by cable TV networks: this ranges from e.g. 17.5 minutes (A&E Group) to 14.3 minutes (Warner Media) for primetime ads, for a median ad time of around 13 minutes across networks.

Many analysts are of the opinion that the monthly cost of $6.99 for having access to Netflix’s library is attractive, but that remains to be seen: the 720p restriction, for instance, is a serious one for people that intend to watch films or shows on Smart TVs (the Basic with Ads tier most probably won’t support HDR color or Dolby Atmos sound either), while the no-downloads restriction is just as serious for people who intend to use the Netflix app offline on tablets or smartphones. The “4–5 minutes on average” for ads per hour of content may not be as easy to swallow as it first appears too: Netflix claims that these ads will be 15–30 seconds in length, meaning that in a course of e.g. a two-hour movie there will be no less than 7 interruptions (assuming that one ad will be shown just before the film). Some people might be OK with that, some might not.

There is one publicity win in Netflix’s announcement, but it’s a small one: the Basic with Ads tier is undercutting the most affordable tier of its most important competitor, Disney Plus, by… one dollar. Even this might prove to be short-lived, though: Disney has already announced that it’s also working on an ad-supported model of its own to be made available either in December or early next year — so it will be even cheaper and all we are expecting to see is what that tier’s limitations will be, as well as how that ad model will work. The current most affordable Disney Plus tier actually offers better value for money, though, as — for just that one dollar more — it offers 4K HDR picture and Dolby Atmos sound… without any ads.

The way things have been going for Netflix this year, the company needs this new Basic with Ads subscription plan to work. But it may prove to be too little, too late: it’s arguably not that cheaper than the $9.99 Basic plan (which offers more features and comes with no content restrictions), so there won’t be a lot of downgraders, whereas the current subscribers thinking of leaving the service most probably won’t change their minds for a couple of bucks. But if this plan is more about attracting new customers than retaining existing ones, it begs the obvious question: are there that many consumers who have not used Netflix yet, that would be tempted to do so for $6.99 a month, as to make a difference in the service’s subscription base?

What Netflix — and many journalists, truth be told, including yours truly — probably did not expect is the negativity expressed in the comments sections of websites and forum threads upon the announcement of the Basic with Ads plan. There seem to be a lot of people thinking that if consumers are forced to watch ads on Netflix, then the service’s content should be offered either for way less or even for free. While this view is certainly unrealistic, it does underline a problem of perception Netflix is currently facing: for more than a decade the company offered a lot of content for an affordable flat price without ads at all, while now it’s trying to offer less content and functionality for not much less money and, at the same time, to create a new revenue stream of income for itself based on its vast customer base.

This does not sit well with a lot of people and it will be interesting to see what consumers worldwide really think of the new Basic with Ads Netflix subscription plan in time. The first few months of its availability may or may not be indicative of that — but in a year from now, after this new tier is accessible to many more people, we may get a much better picture of how much value they actually put on Netflix after all. Worried yet, Reed?