Netflix ad-supported tier gains popularity among US viewers: What you need to know

Netflix has long been known for its ad-free streaming experience, but recent reports suggest that the company may be considering a shift in its business model. According to sources, Netflix is testing an ad-supported tier in select markets, and the concept appears to be gaining traction in the US. In this article, we will explore what this means for Netflix, its viewers, and the wider streaming landscape.

The Growth of Ad-Supported Streaming

In recent years, ad-supported streaming has become an increasingly popular model for streaming services. Platforms such as Hulu and Peacock have successfully incorporated ads into their business models, offering viewers a lower-priced alternative to traditional cable TV. According to a recent report by eMarketer, the ad-supported streaming market is expected to grow by 29.5% this year, reaching $11.36 billion in revenue.

Netflix has long resisted the ad-supported model, instead relying on its subscription-based service to generate revenue. However, the company is now reportedly exploring an ad-supported tier in select markets. This tier would offer a lower-priced alternative to Netflix’s existing plans, but with ads interspersed throughout programming.

The Pros and Cons of Ad-Supported Streaming

There are pros and cons to the ad-supported streaming model, both for viewers and for streaming services. For viewers, the main advantage of an ad-supported model is the lower cost of entry. Ad-supported streaming plans are typically cheaper than ad-free plans, making them a more affordable option for budget-conscious viewers.

However, the downside of ad-supported streaming is obvious: ads can be intrusive and disruptive to the viewing experience. Viewers who are accustomed to the ad-free experience on Netflix may not be willing to tolerate ads, particularly if they are frequent or poorly targeted.

For streaming services, the advantage of an ad-supported model is obvious: ads generate revenue. This is particularly attractive for services that are struggling to compete with more established players in the streaming landscape. However, the downside is that ads can turn viewers off, particularly if they are poorly targeted or overly intrusive.

What the Growth of Ad-Supported Streaming Means for Netflix

Netflix has built its business on the ad-free streaming experience, but the growth of ad-supported streaming suggests that the company may be missing out on a significant revenue stream. With the reported success of its ad-supported tier in select markets, Netflix may be considering a broader rollout of the model.

However, the success of an ad-supported model on Netflix is far from certain. The company’s success has been built on its ad-free experience, and introducing ads could alienate its core audience. Furthermore, competition in the streaming landscape is fierce, with new entrants such as Disney+ and HBO Max offering attractive alternatives to Netflix.

The Future of Streaming

The growth of ad-supported streaming is just one trend in a rapidly evolving streaming landscape. As more and more viewers cut the cord and turn to streaming services, competition is increasing and business models are changing. Streaming services must find new ways to generate revenue, whether through ads, subscriptions, or other means.

For viewers, this means a wider range of options and potentially lower costs. However, it also means more ads and a more fragmented streaming landscape. As streaming services compete for viewers and revenue, it’s unclear what the future of streaming will look like.

Conclusion

Netflix’s reported move into ad-supported streaming is an interesting development in the streaming landscape. While the ad-supported model offers a lower-priced alternative for viewers, it also comes with the downside of potentially intrusive and disruptive ads. For Netflix, introducing ads could alienate its core audience, which has come to expect an ad-free experience.