As it had previously confirmed, Netflix is launching a cheaper subscription tier with adverts.
On Wednesday, the company announced that it was launching a new ad supported subscription plan with Microsoft.
It’s unclear how much subscribers will have to pay for the new service or when it will be rolled out.
In April, the company had announced that it would introduce a new lower priced ad-supported subscription plan, in addition to its existing plans.
‘It’s very early days and we have much to work through,’ said Greg Peters, COO of Netflix.
So far Netflix offers ads-free basic, standard and premium plans. With the new plan, the company is likely to target consumers who don’t mind their binge watching interrupted by ads as long as they have to pay less.
The streaming company has always kept marketing out of its platform, relying instead on increasing the subscription cost to manage its growth.
But Netflix has had a rough year. Following reports of a loss of subscribers, the company’s share price plummeted.
So it makes sense that it’s turning to advertising to help fund a lower-priced subscription tier to lure people back.
‘Netflix should look to deliver ads that are relevant to the programme or film they are shown during,’ said Kai Henniges, a video advertising expert.
‘It’s also crucial Netflix sets and maintains standards as to the quality and aesthetics of their adverts so they enrich, not detract from, the user experience,’
The company said it lost 200,000 subscribers in its first quarter, short of its forecast of adding 2.5 million subscribers. Suspending service in Russia after the Ukraine invasion has also cost Netflix 700,000 members.
The loss in subscribers could be due to the end of the pandemic-fuelled streaming boom as households axed video subscriptions in record numbers at the start of the year.
Metro.co.uk has reached out to Netflix for comment.
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