Will Netflix Join Disney+ With Cheaper, Ad-Supported Subscription Model?

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If you’re paying upwards of $20 per month for Netflix, changes in the streaming pricing market may have prompted you to wonder whether the streaming TV giant has any plans to offer customers a price break.

Netflix has long held a firm ad-free stance for its product, but that may be harder to do in 2022 and beyond.

Key video streaming competitor Disney+ just announced plans to move forward with an ad-supported subscription option that offers streamers a cheaper way to consume its content.

Meanwhile, Netflix’s most recent moves have been in the opposite direction. It imposed a price hike that impacted two of three subscription levels just a few months ago.

Netflix CFO Spencer Neumann recently commented on how the company views ad-supported opportunities as a growing number of competitors are implementing that strategy as a way to entice budget-conscious subscribers.

Spoiler: You may not like what he has to say.

In this article, I’ll provide more details on Neumann’s comments and compare Netflix’s pricing model to the recent shift in the streaming marketplace.


Netflix CFO Shoots Down Ad-Supported Subscriptions

Netflix is keenly aware of what its competition is doing, but it’s not quite ready to join the ad revenue party.

Netflix CFO Spencer Neumann spoke at Morgan Stanley’s Technology, Media & Telecom Conference on Tuesday, March 8, which was just a few days after Disney announced its plans to move forward with the ad-based subscription model later this year.

He was asked about Netflix’s position on ad-based subscription strategies, and his response remained consistent with what the company has said on the topic in years past.

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“Never say never,” Neumann said about implementing an ad-based subscription, according to Reuters. “But it’s not in our plans right now.”

“It’s hard for us to ignore that others are doing it, but for now it doesn’t make sense for us.”


Why Netflix Is Against Ad-Supported Content

The Reuters report indicated that some Wall Street analysts have been pressuring the company to consider a lower-priced option. New subscriber numbers have dipped in recent quarters, causing a decline in stock value.

But Netflix seems determined to push that off. Perhaps it’s to preserve out of the presentation of its premium content, or maybe it’s fear that ads would compromise a user experience that is considered one of the best in the streaming space.

Neumann spoke further on the matter during a moderated forum at the Morgan Stanley event. Here’s how Deadline.com recounted it:

“I would love to get a show of hands of people who liked that decision by Disney, but I don’t think I’ll get it,” Neumann joked. “It’s not like we have religion against advertising, to be clear,” he continued, on a more sincere note. In building the company’s financial stature, he added, “we lean into consumer experience, consumer choice, and what’s great for our creators and storytellers.” Down the line, an advertising element could confirm with those objectives, but “that’s not something that’s in our plans right now. We have a great model in the subscription business, it scales globally.”


How Other Streaming Services Are Implementing Ad-Based Subscriptions

Disney opting into the ad-supported streaming space has put its name in the news, but really it’s just the latest player to make this move.

Other competitors, such as HBO Max, Paramount+, Hulu and Peacock, are much further along in their implementation of ad-supported versus ad-free subscription models.

Streaming ServiceAd-Supported Monthly PriceAd-Free Monthly Price
Disney+To Be Determined$7.99
Peacock$4.99$9.99
Discovery+$4.99$6.99
Paramount+$4.99$9.99
Hulu$6.99$12.99
HBO Max$9.99$14.99

What you typically see is a cost savings of somewhere between $2 and $6 per month if you opt to put up with commercials.

The customer experience with the ads varies by service. I tested all of these services at the ad-based subscription level, and I found that Paramount+ runs long, frequent commercial breaks while HBO Max shows hardly any ads at all.

Netflix, meanwhile, avoids the discussion altogether by offering three tiers of ad-free subscriptions that vary based on the level of access you receive to the service’s perks:

Netflix Pricing Chart 2022
Netflix.com

With the usefulness of the Netflix Basic subscription waning as things like HD streaming become a “must-have” for most customers, one can’t help but wonder if that $10 price point is where an ad-supported subscription could fit if Netflix ever decides to join the party. It would put Netflix right in line with HBO Max’s ad-supported offering.


Final Thoughts

If you were hoping for a chance to lower your Netflix bill with an ad-based subscription in 2022, Neumann has more or less crushed your dreams.

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It appears that you’ll be paying premium prices for what it considers a premium streaming service for the foreseeable future. And it’s hard to blame Netflix’s stance. It is the “gold standard” by which all other video streaming subscription services are measured.

Unless the cheaper, ad-based subscription model of competing streaming services starts negatively impacting the revenue numbers for Netflix, it seems as though the company will be content to continue with an ad-free strategy.

Disney, Paramount, HBO and NBC have created an interesting test case to watch, though. Each has plans to continue creating new and premium original content on its streaming services alongside offering discounted subscriptions.


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