Confirmed: Netflix to have ads by the end of this year

Ads are finally going to infiltrate Netflix later this year. Netflix Co-CEO Ted Sarandos discussed the streamer’s future strategy at the Cannes Lions festival.

The Hollywood Reporter describes Sarandos as saying: “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. We’re adding an ad tier; we’re not adding ads to Netflix as you know it today. We’re adding an ad tier for folks who say, ‘Hey, I want a lower price and I’ll watch ads.’”

News originally broke of Netflix’s intention in an internal letter to employees reported on by The New York Times in May.

Slated to launch within the final three months of the year, Netflix is hoping that the new, more affordable tier will woo people put off by its recent price hikes, following the news that it lost subscribers — around 200,000, to be precise — for the first time in over a decade. Given that the company predicts a loss of two million more subscribers in the next quarter, it’s easy to see why ads have entered the conversation, despite past resistance.

There are currently three Netflix subscription tiers, the cheapest of which is the $9.99/£6.99 permonth non-HD option that’s limited to watching content on one screen at a time. This is followed by the $15.49/£10.99 HD offering which bumps things up to two screens, and the $19.99/£15.99 Ultra HD package which unlocks simultaneous viewing across four screens. Check out the various Netflix packages.

It’s unclear where exactly this new ad-supported tier will slot into, but we wouldn’t be surprised to see it undercut the cheapest existing package or replace it entirely. Channel Four’s ad-free All 4+ streaming service, for context, costs £3.99/month, so we could see something along those lines.

This is all, by the way, following Netlifx’s trials in Chile, Costa Rica and Peru, where customers are paying an extra fee to share their accounts with two people outside of their household. There’s currently no word on when or if this extra charge will become permanent or widespread.

With studios pulling their content from Netflix over the years to create their own streaming services, criticism over cancelled shows, and the recent price hikes, it’s certainly a rocky spell for the company that pioneered online streaming.

As for what the upcoming ads will look like, how people will respond to them, and if future Netflix originals will be filmed differently with ad breaks in mind, all remains to be seen.

Read more: The 41 best things to watch on Netflix UK

About

Esat has been a gadget fan ever since his tiny four-year-old brain was captivated by a sound-activated dancing sunflower. From there it was a natural progression to a Sega Mega Drive, a brief obsession with hedgehogs, and a love for all things tech. After 7 years as a writer and deputy editor for Stuff, Esat ventured out into the corporate world, spending three years as Editor of Microsoft's European News Centre. Now a freelance writer, his appetite for shiny gadgets has no bounds. Oh, and like all good human beings, he's very fond of cats.