Netflix plans new Australian subscription tier that includes ads and will cost around $8 per month

Global American streaming service Netflix has announced big plans to unveil its new advertising subscription tier in Australia before the end of this year. 

According to Bloomberg and other international reports, the Netflix ad tier could cost anywhere between $7 to $9 a month. This is half as much as its most popular Standard plan, which currently costs $15.49 a month with no commercials. 

Local media sources are reporting the figure is expected to be closer to the $8 mark and have revealed that discussions between Netflix and local advertisers about plans to roll out the ads have already commenced. 

A Netflix spokesperson says the company is still making decisions on how to launch.

“We are still in the early days of deciding how to launch a lower priced, ad-supported option and no decisions have been made. This is all just speculation at this point,” the spokesperson said.

Under this advertising tier, Netflix is aiming to air four minutes of commercials per hour. These advertisements will be unskippable and appear before and during programs, whether it’s an episode or a film. 

In an April Netflix Q1 2022 Earnings Interview, Netflix co-chief executive Officer Reed Hastings revealed that Netflix would begin exploring a cheap, ad-based option after it reported its first drop in users in more than a decade.

“Those who have followed Netflix know that I have been against the complexity of advertising and a big fan of the simplicity of subscription,” he mentioned at the time.

“But as much as I am a fan of that, I am a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and are advertising-tolerant to get what they want makes a lot of sense.”

Bloomberg has further reported that Netflix’s “goal is to attract subscribers who are willing to watch some ads in exchange for a lower monthly rate. As the streaming TV pioneer prepares to introduce advertising for the first time, it’s trying to strike a careful balance between reaching a more cost-conscious consumer while still offering a pleasant experience”.

“Netflix plans to sell about four minutes of commercials per hour for the ad-supported service, far less than most of its peers, according to people familiar with the company’s plans. The company will show advertisements before and during some programs, but not after.

“It’s also telling advertisers it wants to make smaller deals upfront so it doesn’t overpromise and overwhelm viewers with the spots, said the people, who declined to be identified because the discussions are private,” the report stated.

The Netflix subscriber count as of 2022 is 221.64 million, however in April of this year, The New York Times reported that Netflix “lost 200,000 subscribers in the first three months of the year — the first time that has happened in a decade — and expected to lose 2 million more in the months to come”.

“Since the subscriber announcement, Netflix’s share price has dropped sharply, wiping away roughly $70 billion in the company’s market capitalisation,” the NYT continued. 

Netflix joins other streaming services that offer an advertising hybrid option, including Amazon Prime Video and Paramount. Disney is also another streaming service that has recently announced that it will offer an advertising tier.