Netflix Launches Ads: Will It Be Enough?

In November, Netflix will launch a new streaming plan that includes adverts after many years of an ad-free platform, and this will be rolled out in 12 countries including the UK. 

We take a look at why they finally moved to an advertising model, what this means for streaming, and whether the new plan will be enough to keep Netflix in a position of power against its new streaming competition. 

What will Netflix with ads look like?

For those who are worried their viewing experience is going to be ruined by adverts, rest assured that this will just be an option offered by Netflix. Adverts will not appear on every version of their platform – at least not for the time being. 

Netflix has stated that those who opt for the new offering should expect to see an average of four to five minutes of adverts per hour. Ads will be either 15 or 30 seconds in length and will be played both before and during TV series and films. However, for new films being launched, there will be no ‘mid-roll’ adverts.

It has been reported that the ad-supported inventory has nearly sold out ahead of the November launch, with many big names wanting to take advantage of the opportunity to advertise to a streaming audience.

To begin with, the pricing for the plan Basic with Ads will be £4.99/month in the UK and $6.99/month. For those that aren’t bothered about having adverts included in their viewing, this will be a cheaper alternative and potentially allow them to keep the subscription going when they would otherwise consider cancelling it.

Another thing to keep in mind is that a “limited” number of films and TV series won’t be available at the beginning of the Basic with Ads plan due to licensing restrictions.

Does this mark the end of the ‘golden era of streaming’?

For a long time, it seemed as though Netflix would be ad-free forever. Part of its mass appeal from the start was that the viewer didn’t have to sit through loads of adverts that broke up the flow of their favourite TV shows and added to the overall runtime.

In fact, Netflix pretty much created ‘binge-watching’ – where viewers could watch episode after episode of a TV show without having to break up the viewing. Many of us are guilty of having finished a whole series in a day!

However, it seemed that Netflix could not resist the pull of advertising forever. As with pretty much all tech companies, they eventually understood that advertising is the key to turning a profit, rather than a subscription model. Advertising is where they make the most money in times of trouble, especially when people are resistant to paying a high monthly subscription price.

Why did Netflix decide to include an advertising model?

Netflix has fast been losing subscribers as it increases its prices while people are simultaneously experiencing a cost of living crisis. 

Add to this the far wider choice of streaming platforms available – with serious competition from Amazon Prime, Apple TV and Disney Plus – things were looking tough for the original streaming giant. And the worries were realised – Netflix lost nearly one million subscribers between April and July 2022. 

At the moment, having a plan with adverts and more premium options without adverts seems like a reasonable compromise. It is something that their musical counterpart Spotify has been doing for many years – and people may even be more willing to sit through adverts in their TV and film than they are their music. 

They need to strike a fine balance between showing ads to those that are happy to put up with them for a cheaper package during tricky economic times and not aggravating its existing audience that is overexposed to ads elsewhere.

Will ads be enough to keep Netflix strong?

Even with the addition of an advertising model, the threat from the competition still looms large. The mega platforms mentioned above like Amazon Prime, Apple TV and Disney Plus are all investing a lot into their content libraries and they are coming for the crown.

Apple TV, for example, is focusing on big-budget TV dramas like Severance to attract new customers and it also has a number of big hitters in its library, including Succession and Ted Lasso. 

Indeed, for those UK viewers who are unwilling to pay for a streaming service, there are many free options available to them from traditional broadcast television networks. 

Research company Kantar found that under-24s were particularly likely to cancel their subscription as they are turning to free alternatives such as BBC iPlayer, Channel 4’s All 4 and ITV Hub. These all have more impressive libraries of streaming content compared to what they had a few years ago when Netflix was arguable in its prime.

While it’s clear that Netflix’s business model is changing out of necessity, and it has been experiencing warning signs this year, some have argued that it is simply moving into its next phase as a company. It is showing a new focus on cash flow and revenue rather than just growth. It is not the ‘big tech’ company people once thought it would be – active in many different areas like Apple and Amazon – but a media company. And it needs to act like one by focusing on what works.

In other words, Netflix will survive and continue to evolve – it’s just no longer the ‘golden boy’ of streaming that it once was and it has had to come to terms with that.

Others have argued that, as well as focusing on new ways to keep customers and increase revenue, it also needs to evaluate its content and be more selective. Of course, Netflix is home to incredibly popular shows like Stranger Things, Bridgerton and Sex Education. Still, lots of people feel it has a ‘throw everything at the wall and see what sticks’ approach compared to some of its competitors.

According to TV critic Hayley Campbell, Netflix has a bad “ratio of rubbish to brilliant”  and is “pumping out endless shows without stopping to check if they’re good”.

Moving forwards, Netflix may need to sharpen its offering to keep subscribers interested, but a move to the advertising model shows they are willing to evolve to keep up with the competition.