Is Netflix’s Upcoming Ad-Tier A Precursor for More Price Increases?

/ 2 years ago
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It’s pretty much a foregone conclusion that at some point, either late this year or in early 2023, Netflix will announce the launch of its brand new ad-supported subscription tier. Effectively representing a fourth and least expensive option to consumers, it has clearly been a matter of more than a little speculation as to exactly how much the streaming platform plans to charge for it.

At the right price, it could be a huge success. At the wrong price… Well, it’s not going to attract anyone!

Following information appearing online over the last few days (Bloomberg), however, sources are claiming that Netflix is currently considering a price of somewhere around $7-$9 for its upcoming ad tier. – If this is accurate, however, then I’m struggling to see exactly how this is going to pan out across their current pricing structure. Put simply, I worry that this might be a precursor for more price increases!


Netflix Ad-Tier – Problematic for Existing Price Structure?

I’m primarily going to be focusing on this from the USD (US dollar) perspective because we in Europe and the UK are typically doing a lot better on our Netflix subscription than our American cousins. Primarily because the US prices increased last January with Europe and the UK still yet to (mostly) see a similar move.

As things currently stand, the three-tier system in America comes at the following prices; $9.99 for the Basic plan, $15.99 for Standard, and $19.99 for Premium. – Simple enough, right? Well, presuming that this new ad-supported tier is going to cost around $7-$9, I honestly don’t think this is enough of a ‘discount’ to really attract people who left the platform because they didn’t want the expense anymore. And let’s face it, with circa 1-2 million people leaving the platform since the start of this year, Netflix is desperate to win people (and business) back!

Overall, if this is how much the ad tier is going to cost, I think it might be a precursor that other costs are set to increase and this $7-$9 will be where this ‘cheapest’ tier will sit in the new landscape.


A New Pricing Structure

This is, of course, all speculation on my part. Looking at the figures in the US, however, it does make me wonder how this advert-supported tier is going to work in the UK. At the moment we pay £6.99 for the ‘basic’ package, which, as noted above, is already seemingly long overdue for an increase. – Based on the current price structure, you’d have to think this new ad level would have to come in at around £4.99 which, although clearly less expensive, I’m not sure if it really has the impact necessary to attract people when, for just £2 more, you can get Netflix without the ads and the added perk of being able to download programs for later offline viewing (which isn’t going to be available on the ad-tier).

Overall, while I can see the ad-tier landing for £4.99, this is undoubtedly going to go hand in hand with price increases for the other ‘standard’ tiers. – Yes, it might only be around £1 extra, but I honestly think that the introduction of this new tier could, if Netflix gets the pricing wrong, really backfire in a monumental fashion.

And lest we forget that after their latest financial disaster that was ‘Resident Evil’, Netflix isn’t exactly in a great position to suffer another cock up at the moment!

What do you think? – Let us know in the comments!

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