Commercials are coming to Netflix

Commercials are coming to Netflix

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Commercials are coming to Netflix
You'll soon be able to get Netflix at a lower cost by watching commercials.
Photo: Netflix/Cult of Mac

It’s official: Netflix is adding a cheaper ad-supported tier to its streaming service. The change is apparently intended to reverse a recent drop in subscribers.

It’s part of a trend, as rival streaming service Disney+ announced this spring it is making the same move.

Get Netflix for less by watching commercials

Netflix is the most popular streaming service with over 200 million subscribers. Many of those people use an Apple TV, Mac, iPad or even iPhone to enjoy the wide range of TV shows and films available.

But Netflix’s subscriber total dropped recently, and execs apparently think a lower-cost ad-supported rate will bring a rush of new subscribers.

The company talked about the change in an internal memo that leaked out in May, and an official announcement came Thursday from Netflix’s co-CEO Ted Sarandos, according to Hollywood Reporter.

“We’ve left a big customer segment off the table, which is people who say: ‘Hey, Netflix is too expensive for me and I don’t mind advertising,’” Sarandos reportedly told an audience at the Cannes Lions advertising festival.

Commercials will be an option, not forced on all subscribers. “We adding an ad tier; we’re not adding ads to Netflix as you know it today,” Sarandos promised.

While the Netflix executive made the change official, he shared no details. He did not reveal how much watching commercials will lower the cost of a subscription. Nor did he say when the ad-supported plan will first become available, or in what countries.

Currently, there’s a basic plan that lets subscribers watch content on one screen in non-HD quality for $10-per-month, while the Standard plan with HD streaming is priced at $15,50. The Premium plan with 4K streaming and the ability to watch content on up to four devices simultaneously costs $20.

Ads a popular choice for streaming services

Disney+ is another streaming service that started out ad-free and recently changed course by announcing a commercial-supported tier.

Disney also owns Hulu, which has long had a lower-cost ad-supported option. And more people use the $7-per-month version than pay the full $13-per-month price to avoid the commercials, according to Hulu.

NBC’s Peacock is another streaming service that gives subscribers a break if they watch more ads. An ad-supported plan costs $5 or viewers can pay twice that to get fewer ads.

Apple TV+ does not include commercials. The only option to watch Apple’s streaming service is by paying full price. That said, the cost is just $4.99 a month, the same or lower than many rival ad-supported plans.