Your Netflix free ride may be coming to an end — but it’s not the end of the world. Nor will it likely be the end of the ride for you. It certainly isn’t going to be for me.
Netflix is reportedly rolling out an ad-supported tier by the end of the year, at the same time it begins a password sharing crackdown. The company is doing this in response to a dismal first-quarter earnings report, which revealed the loss of subscribers for the first time in over a decade. Worse, two million more subscribers are expected to jump ship in Q2.
Netflix executives immediately pivoted to launching an ad-supported tier, which they previously pooh-poohed as not on brand. Well, I guess losing $50 billion in market cap in one day is even more “not on brand.”
The acceleration of the ad rollout is a bit surprising. Then again, maybe it’s not, considering Netflix’s main competitors (which include some of the best streaming services) either already have AVOD (advertising-based video on demand) tiers or are launching them by the end of the year. Disney Plus plans on jumping into the money-filled pool of advertising-supported streaming, while HBO Max, Peacock, Paramount Plus and Hulu are already swimming in it.
To keep up, Netflix has evolve, too. The service will keep charging more and more — one way or the other — but a lot of you will continue to pony up because you can’t fathom not watching Stranger Things season 4 or Bridgerton season 3. And even more of you will keep subscribing out of sheer inertia.
So what if Netflix has ads?
If you don’t want to watch ads on Netflix, then don’t subscribe to the plan that has ads. Simple!
While the company hasn’t outlined their new tier system, I highly doubt they’ll charge their existing subscribers more for the Standard plan (now $15.49 per month) — it already had a price hike earlier this year. If they did, there would be a revolt and Netflix really cannot afford to lose tens of millions of subscribers en masse.
| Netflix plan | Price | Picture quality | Simultaneous streams |
|---|---|---|---|
| Basic | $9.99 per month | SD (up to 480p) | 1 |
| Standard | $15.49 per month | Up to 1080p | Up to 2 streams |
| Premium | $19.99 per month | Up to 4K UHD | Up to 4 streams |
Launching an ad-supported tier is intended to attract new people, the ones who haven’t subscribed yet because even the $9.99 Basic plan is a bit too expensive.
My guess is that Netflix will add an even lower-cost plan at $7 or $8, which would be similar to ad-supported Hulu or regular Disney Plus [who knows what streaming quality Netflix will give these customers]. However, Netflix has a bigger, more varied library than either of those services on their own. That number would also undercut HBO Max’s ad tier, which is $10.
Most likely, one or maybe two ads would run as pre-roll since none of Netflix’s original shows and movies were produced with commercial breaks in mind. And I don’t know that the company has the ad tech yet to take advantage of the mid-program breaks in licensed shows like Seinfeld and Grey’s Anatomy.
If I turn out to be right, many of you won’t see anything different when you fire up Netflix. You won’t ever see a single ad, and neither will I.
Even if the company decides to charge more than it does for an ad-free plan, I’ll pay it — even though I’m personally willing to tolerate ads. I do so on Hulu and Peacock. When Disney Plus rolls out an ad tier, I’ll downgrade to it. But I watch more content on Netflix than any other service, with the possible exception of HBO Max. I’m willing to pay a couple extra bucks a month to keep my blissfully ad-free Netflix binges.
Even so, if my financial situation changes and I need to tighten my budget, a cheaper Netflix option would be welcome.
So what if Netflix cracks down on account sharing?
The other big change looming on the Netflix horizon is a crackdown on password sharing. For years, everyone and their mothers have shared Netflix accounts. The company itself gave the practice a winking shrug (in a since-deleted tweet):
But now Netflix needs to find new subscribers, so they’re targeting the millions of grown adults out there who are still using their parents’ account.
The “crackdown” is unlikely to be a total prohibition on account sharing. Instead, the company will probably charge an extra fee for the feature. They’re already testing the fee in Chile, Costa Rica, and Peru right now.
When they rolled out the test in March, Netflix said, “Members on our Standard and Premium plans will be able to add sub accounts for up to two people they don’t live with—each with their own profile, personalized recommendations, login and password.” The fees vary by country, but convert to around $3.
So, when Netflix rolls out the fee across the board, a few things may happen as a result. One is that your mom/friend/ex doesn’t want to pay the extra $3 per month and cancels their account entirely, leaving you in the dark. At that point, you’ll have to sign up for Netflix on your own (and if you’re on a restricted budget, you may be thankful for the cheaper ad-supported tier).
Or if you currently split the cost of an account with a few relatives or friends outside of your household, an additional $3 is pretty negligible.
This will feel like a real crackdown, though, if you split an account with like a dozen people. Again, maybe you’ll have to hold your nose and watch ads.
Will this kill Netflix’s brand?
For years, Netflix claimed the superiority of an ad-free subscription service. And up until recently, it was proven right. The company’s valuation soared, Emmys and Oscars flowed in, dozens of titles dropped every month, and binge-watching became a cultural norm. In the 2010s, Netflix’s brand was welcoming as many people onto the ride as possible — even if they didn’t pay for a ticket. Because of that, they became the premier, can’t-miss-out entertainment destination.
But the streaming landscape has changed; it’s still changing. Now, Netflix is the senior statesman in danger of becoming outdated and irrelevant. A drop in the quality of content has prompted many people to consider cancelling Netflix. Services like HBO Max and Apple TV Plus have a better batting average when it comes to new shows and movies.
So, Netflix will have to evolve, too. Ads and account sharing fees will turn off some subscribers, but I think more will stay, even if it’s simply due to laziness. If getting more subscribers yields the future Ozark or Maid or BoJack Horseman, then I’m all for whatever that takes.
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