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Netflix’s subscription with ads may bring cheer, but it’s not all doom and gloom


It had for long been expected. So much so, the inevitability was tantalizing. The much talked about affordable Netflix subscription plan, is closer than ever before. The fine print is, it’ll be supported by advertisements. No date yet for when the ad-supported plan rolls out, but it is now confirmed that tech giant Microsoft will be the “global advertising technology and sales partner”. But can this be akin to a soothing hand over the furrowed brow for Netflix, which has faced a multitude of challenges over the last few months, and continues to do so?

Ads on Netflix: unwrapping the changes for you

To unfold it simply, brands that wish to advertise will be working with Microsoft to bring these ads to the Netflix platform, for subscribers who opt for this ad-supported plan. While you will continue to stream Netflix content as you do now, the viewing experience will be occasionally interrupted by advertisements. Much like how commercial breaks make their presence known on Live TV channels, or indeed even on YouTube (if you haven’t signed on for Premium).

It is not yet clear what sort of total time or frequency-based capping, if any, Netflix would implement for commercials. This may be dependent on the duration of the content, which may mean different benchmarks for TV shows and movies.

This may prove to be good timing for Microsoft too. The company is believed to be working on bringing unintrusive ads to the free-to-play Xbox games. But these will unlikely be in the form of traditional ad breaks, with smarter deployment within games (such as on billboards or avatars in a game).

“All ads served on Netflix will be exclusively available through the Microsoft platform. Today’s announcement also endorses Microsoft’s approach to privacy, which is built on protecting customers’ information,” says Mikhail Parakhin, President Web Experiences at Microsoft, in a statement. The company has, at the time of writing this, not detailed the privacy aspect, and how (as well as the specifics of what all) user data will be collected.

Will it be purely based on Netflix usage habits, or will Microsoft be able to plug in data from other apps (particularly on mobile devices) including Edge and Bing?

It had been brewing for a while

It was in April when Netflix had first talked about the possibility of an ad-supported subscription plan, to be available alongside the current subscription packs for mobile only, mobile + TV and Ultra HD streaming. “It’s very early days and we have much to work through. But our long term goal is clear. More choice for consumers and a premium, better-than-linear TV brand experience for advertisers,” says Greg Peters, Chief Operating Officer and Chief Product Officer at Netflix.

They won’t be the first streaming service to do the ad-supported subscription option. Hulu, now owned by Disney (which also owns Disney+ Hotstar platform in India, a Netflix competitor has had an ad-supported subscription plan for years. The difference in cost is profound – $6.99 per month (ad-supported plan) compared with $12.99 for ad-free streaming. HBO Max, not available in India for now, has followed the same template – $9.99 per month (for ad-included streaming) and $14.99 for ad-free streaming.

Netflix’s reasons for this journey, are different

Unlike Hulu and HBO Max, for instance, Netflix has remained comparatively more affordable. But for the first time in a decade, earlier this year, the service revealed that it had lost 200,000 subscribers in a quarter. The long run of good luck has finally reached its end. The outlook isn’t any brighter, with estimates of losing as many as 2 million more by the time the current quarter ends. The active subscriber base globally is around 222 million users.

The streaming giant believes the reasons for its struggles are multi-pronged. Earlier this week, Ted Sarandos who is Netflix’s Co-CEO and Chief Content Officer, said in an interview with French newspaper JDD there’s been an impact of inflation on household budgets, which has seen many cancel subscriptions.

He also pointed to strain in smart TV supplies and therefore sales, also exacerbated by the prolonged semiconductor shortage. Netflix also exited the Russia earlier this year, after the country’s military invasion of Ukraine led to a boycott of the market from many global companies, as well as the subsequent sanctions.

Netflix faces the challenge of subscriptions being shared by multiple users, which it is cracking down on. Some of Netflix’s plans allow simultaneous streaming on multiple screens, which has the potential to be misused. The first phase of the test in Chile, Costa Rica, and Peru is weeding out users who don’t live with the original subscriber, with the option of add-on subscriptions for a significantly reduced cost.

According to research by Magid in late 2020, around 33% of all Netflix users share their passwords with at least one more user outside the household. Extra member subscriptions can be added to Standard and Premium subscription plans for $2.99 in Costa Rica (around 227), 2,380 CLP in Chile, and 7.9 PEN in Peru.

In December, Netflix reduced subscription prices in India by as much as 60%. It now costs 149 per month for Netflix Mobile plan (instead of 199), 199 for Basic, 499 for Standard, and Premium for 649.

It is not all doom and gloom though

Netflix’s bets on original content have worked out well, and it is no surprise that the streaming giant doesn’t want to go slow on investments on that front. The popularity of the latest season of Stranger Things, is just the latest chapter. A collaboration with digital collectibles platform Candy Digital will see the launch of a series of NFTs featuring Stranger Things characters. These go Live today. In the first release, 11,111 tokens will be available for minting.

Squid Games, the Korean thriller series which became Netflix’s most successful show ever (142 million households watched it in the first four weeks, the highest for any series in Netflix’ history), has been nominated for the Emmys 2022, for the drama series category. This sits alongside Stranger Things, which has also been nominated.

Not just original content. In June, Netflix had said the Hindi version of S S Rajamouli’s period action epic “RRR” became the most popular film from India on the platform, globally. It was viewed for over 45 million hours around the world, in a period of just over a month since the movie’s arrival on Netflix.

    vishal mathur

    Vishal Mathur is Technology Editor for Hindustan Times. When not making sense of technology, he often searches for an elusive analog space in a digital world.
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