Netflix plans to offer cheaper, ad-supported tiers to consumers over the next year or two, the world’s largest on-demand video streaming service said Tuesday, as it looks to boost its subscriber base amid stiffer competition from rival firms.
Netflix subscription plans currently do not support ads. This is one of the primary reasons they are not so cheap. The ads can be annoying to deal with, but if you are getting the same content at a cheaper price, it would not hurt to endure a couple of ads.
The new ad-supported tier will cost less. Other streaming services have similar plans. HBO Max, for instance, offers a commercial-free service for $15 a month and charges $10 a month for the service with advertising.
Last month, Netflix also announced that it intended to begin charging higher prices to subscribers who share their accounts with several people.
The subscribers are not happy with the company’s decision.
Its subscribers have not reacted well to this preparation of Netflix. Many people claim that if they had to see the advertisement, they would leave the service. Twitter user @GGnotGIGI713 wrote, ‘I have been a Netflix subscriber for a long time. If I get ads on my paid subscription account, I will leave the service. Another handle @UCantCensorThis wrote, I am just telling you that if my service is interrupted due to an advertisement, I will cancel my subscription faster than you ask for a commercial break.
However, industry experts say that the ad-supported subscription plan may entice some consumers who are struggling with cost-cutting in their lives. Netflix announced on April 19 that it had lost 2 lakh subscribers in the first three months of the year. Expect to lose more customers in the second quarter. The company’s shares have also declined significantly.
Netflix is bringing Ad-supported Cheaper Netflix Plans
In a letter to shareholders, Netflix said, “Our goal is to sustain double-digit revenue growth, increase operating income even faster (as we expand margins), and generate growing positive free cash flow (FCF). During this period of slower revenue growth, assuming no material swings in foreign exchange, we aim to protect our profitability and manage to a minimum operating margin roughly in line with current levels (i.e., this year’s 19-20 percent guidance). Once we’ve re-accelerated revenue growth, we’re committed to steadily growing our operating margin.”
The company also said it plans to re-accelerate its viewing and revenue growth by continuing to improve all aspects of Netflix, in particular, the quality of its programming and recommendations, which is what its members value most.
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