Netflix with Ads: Everything to Know about Netflix’s Cheaper Tier


    Sarah Tew/CNET

    Netflix?has a cheaper tier with advertising coming within weeks.?
    Netflix, the world’s biggest subscription video service, grew into a behemoth partly thanks to its strategy of making 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 that customers 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. (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, but it will starting in November. When it introduces ads, they will appear only on its new Basic with Ads 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??
    The new Basic with Ads membership option will go live first in Canada and Mexico on Nov. 1. Then it will launch on Nov. 3 in the US, as well as in Australia, Brazil, France, Germany, Italy, Japan, South Korea and the UK. Finally, it will roll in Spain on Nov. 10. On each of these launch days, Basic with Ads will become available starting at 9 a.m. PT.?
    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 has moved up the launch date, reportedly to better compete with Disney Plus.?

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Will Netflix increase prices when it launches Basic with Ads??
    No, Netflix isn’t increasing the prices of its existing plans.?
    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.?
    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 with Netflix 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.?

    On Thursday, Netflix confirmed its existing tiers will stay the same price.?
    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. With the launch of Basic with Ads, the ad-free Basic tier is getting one change that unlocks higher-quality video — both Basic and Basic with Ads are getting 720p HD quality, after HD was previously reserved for Standard subscriptions.?
  • Standard is $15.50 a month, and it allows you to have two simultaneous streams and two devices with downloads. It also unlocks 1080p 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 4K and HDR video quality.

How much will the ad-supported tier cost??
    In the US, Basic with Ads will be $7 a month, saving $3 monthly compared with the cheapest ad-free Netflix membership. ?
    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.?

How many ads will I have to watch on Netflix??
    Netflix said it will average no more than four to five minutes of advertising each hour. Ad breaks will happen both before your program starts (known as pre-roll) and in the middle of your programming at a scene change (known as mid-roll). The company will have “some very tight frequency caps so that members don’t see the same ad repeatedly,” according to Netflix Chief Operating Officer Greg Peters.
    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.?
    Can I download to watch offline with Basic with Ads??
    No. All of Netflix’s ad-free subscriptions allow downloads, but anyone with a Basic with Ads membership cannot download to watch offline.?
    Will Basic with Ads get the complete Netflix library to stream??
    Not entirely. The ad-supported tier also won’t necessarily paywall any parts of the catalog, but a “limited” number of titles won’t be available to watch because of existing licensing restrictions, Netflix said. The number of titles locked out because of licensing terms is roughly 5% to 10% of library, varying by country.?