Netflix is currently working on its ad-supported streaming plan. What makes this plan different from the existing ones is it will not let subscribers download TV shows or movies to mobile devices offline.
Netflix's Ad-Supported Plan
According to MacRumors, the popular streaming platform is expected to launch the ad-supported plan in early 2023. As of press time, Netflix has not announced pricing or other details about the tier.
Per a Bloomberg report, a code in Netflix's iPhone app was discovered by an independent developer, and a text that was included said that "Downloads available on all plans except Netflix with ads."
In addition, the information in the app's code indicates users on the subscription plan with ads will not be able to skip commercial breaks.
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A representative for Netflix said that the company is still deciding how to launch a lower-priced, ad-supported option, and no decisions have been made yet, so all of the reports are just speculation at this point.
The streaming platform previously introduced downloads for offline viewing in 2016 and has since added more features like allowing users to automatically download the next episode in a TV series they are watching.
Distributing Netflix Ad-Supported Plan
Variety reported that in announcing Q2 earnings, Netflix told investors that the ad-supported plan would first be available in a handful of markets where ad spending "is significant," including the US.
Netflix's quarterly letter to shareholders stated that, just like most of its new initiatives, its intention is to roll out the ad-supported tier and listen to customer feedback so they can improve the feature.
The streaming service added that their advertising business in a few years will "likely look quite different than what it looks like on day one."
In July, Netflix announced a partnership with Microsoft to serve as its exclusive advertising partner. On the Q2 earnings interview of the company, COO Greg Peters confirmed that Netflix ads will be sold exclusively by Microsoft.
Ted Sarandos, co-CEO and CCO of Netflix, said that not all content on the no-ads subscription plans would be available in the advertising version.
Sarandos said that most of what people watch on the streaming platform could be included in the ad-supported tier, and they are talking with studios about this move.
Netflix's planned ad-supported tier is part of the company's strategy to find a new source of revenue growth.
The company will also soon prevent users from sharing passwords with people outside of their household, as Netflix's subscriber count has decreased in the first half of 2022.
The streaming company said in the earnings letter that its hope is to create a better TV ad model that is more seamless and relevant for consumers and more effective for their ad partners.
Netflix added that it would take some time to grow its ad tier and associated ad revenues for the ad base. Still, they think advertising can enable substantial incremental membership through lower prices and profit growth via ad revenues over the long run.
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Written by Sophie Webster
