Netflixad-supported new layer will block access to some content, including BBC original performances.
The streaming giant’s co-CEO Ted Sarandos said during a teleconference this week that the new ad tier won’t have access to Netflix’s entire content library.
Sarandos spoke after the announcement that Netflix lost 970,000 subscribers in the second quarter of this year.
This is almost five times the amount lost in the first three months year and a sharp drop from 8.3 million new subscribers added in the fourth quarter of 2021.
Earlier this year, Netflix announced that it would bring ads to Netflix for the first time. The new ad-supported Netflix tier will be added to Netflix, likely by early 2023, and will be cheaper than the other existing tiers – Basic, Standard and Premium. Now, the streaming giant’s co-CEO has said the new tier won’t have access to Netflix’s entire content library.
Some shows produced by Netflix in collaboration with the BBC, such as The Serpent and Dracula (pictured), may be blocked in the new ad-supported tier.
“Today, the vast majority of what people watch on Netflix we can include in an ad-supported tier,” Sarandos said.
“There are some things that aren’t there – which we’re discussing with the studios – but if we launch the product today, ad-level members will have a great experience.
“We’ll clean up some additional content, but certainly not all, but we don’t think it will be a significant hurdle for business.”
Content produced by the BBC may be excluded from this level because the BBC is not allowed to run ads supporting its programs due to a license fee.
John McVeigh, chief executive of Pact, the UK trade organization for manufacturers, said: time that some shows produced by Netflix in collaboration with the BBC, such as “The Serpent” and “Dracula”, may be blocked in a new ad-supported tier.
“If it’s an original BBC production, the BBC’s licensed funding can’t be backed by ads,” McVeigh said.
A spokesman for the BBC told MailOnline it was “too early” to comment or confirm.
The California-based streaming giant plans to launch a new ad-supported tier around early 2023, starting with “a few markets where ad spending is significant” — possibly the US and UK.
The new tier will be cheaper than the other existing tiers – Basic, Standard and Premium, but it will not be free, meaning customers will have to endure ads on top of paying a monthly subscription.
The hope is that the cheaper tier will help attract budget-conscious users and in turn help Netflix reverse its recent drop in subscribers.
Netflix added 8.3 million new subscribers in the fourth quarter of 2021. But for two consecutive quarters, he was losing followers, not gaining them.
Jesse Cohen, senior analyst at Investing.com, predicts the new ad-supported tier will be successful for Netflix and will attract younger users.
“The launch of a cheaper, ad-supported version of the Netflix service is expected to be a much-needed growth catalyst that the streaming giant has been missing in recent years,” Cohen told MailOnline.
“We expect advertisers looking to reach younger viewers who have moved away from traditional television are likely to allocate the majority of their marketing budget to ads on Netflix going forward.”
Mike Prue, vice president and chief research officer of Forrester, said the new tier would “reduce costs for ad-tolerant users who are feeling price cuts.” attract new price-conscious users who didn’t want to pay a higher price.
“In addition to additional subscriptions, advertising will also provide an advantage to Netflix in the form of a new revenue stream from brands looking to reach the platform’s targeted audience,” Prue told MailOnline.
Netflix’s streaming competitor, Disney+, will also introduce an ad-supported subscription tier, likely later this year, although pricing has yet to be revealed.
Serpent is a British crime drama commissioned by the BBC and currently available to watch on Netflix.
Disney+ has a host of hugely popular and extensive content libraries, including Star Wars, Marvel and Disney movies, as well as The Simpsons and some exclusive series, including an eight-hour Beatles documentary.
Also during this week’s teleconference, Netflix CEO Reed Hastings said that traditional television “definitely” leave in five to ten years.
If Hastings’ prediction is correct, the BBC and ITV will exist as on-demand streaming platforms, not TV channels, as early as 2032.
“Looking ahead, streaming works everywhere,” Hastings said during the call. ‘Everyone pours in. This is definitely the end of linear TV in the next 5-10 years.”
Hastings also said on Tuesday that Netflix is ”very well set for next year” and that the underlying business drivers “continue to improve.”
Netflix expected to lose 2 million subscribers in the second quarter, so Tuesday’s results weren’t nearly as bad as they feared.
Hastings pointed out that the hit “Stranger Things” kept subscribers for a quarter.
The fourth season of the sci-fi show, produced exclusively for Netflix, began streaming at the end of May.
