You'll have to sacrifice content for the cheaper Netflix plan with ads

Netflix is in the process of creating an ad-supported tier for its subscribers. While the new plan will make the streaming service more affordable for subscribers, it’ll have a disadvantage — less content.

Netflix’s Co-CEO and Chief Content Officer Ted Sarandos confirmed on Tuesday that the cheaper Netflix plan, which will be rolled out with the help of Microsoft, will not have all of its licensed content.

If you plan on subscribing to the Netflix ads plan, you can expect to get all of the original shows and movies the platform has to offer. However, the service still licenses a ton of content from other studios and distributors, and some of it might be excluded from the new plan.

“Today, the vast majority of what people watch on Netflix, we can include in the ad-supported tier. There’s some things that don’t and we’re in conversations with the studios on, but if we launched the product today, members in the ad tier would have a great experience. We will clear some additional content but certainly not all of it but don’t think it’s a material holdback for the business,” Sarandos said during an earnings call held on Tuesday.

Netflix announced the cheaper ad-based plan after it lost 200,000 subscribers in the last quarter, a first for the service in more than a decade. This quarter wasn’t pleasant for the streamer either, with 970,000 subscriber exits. Clearly, the company is betting that changing the cost of Netflix will have an effect on user retention and subscriber growth.

The platform says it will launch its ad plan sometime in early 2023.

“We’ll likely start in a handful of markets where advertising spend is significant,” the company said in its shareholder letter.

The company is also testing ways to make account sharing paid by charging extra for additional members and homes.

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