Netflix’s ad-supported tier will start with a big drawback

By Trevor Mogg July 20, 2022

Netflix first announced plans for an ad-supported version of its streaming service several months ago, though details about it have been scant.

But during an earnings call on Tuesday, Netflix co-CEO and chief content officer Ted Sarandos revealed that Netflix’s ad-based tier will not include all of its licensed content at launch.

In other words, those who go for the ad-supported tier will not have access to Netflix’s entire library of movies and shows. It’s not because Netflix doesn’t want to offer that content, but because its current licensing terms with studios prevent it from sharing that content on a tier that includes ads.

Speaking about the upcoming ad-supported tier during Tuesday’s earnings call, Sarandos said: “Today, the vast majority of what people watch on Netflix, we can include in the ad-supported tier.”

He added that while some content cannot be included at launch, the company is “in conversations with the studios” to try to fix that.

“If we launched the product today, members in the ad-tier would have a great experience,” the Netflix executive insisted. “We will clear some additional content but certainly not all of it.”

Also, the ad-supported tier will not be free, but instead be offered at “a lower price,” Sarandos said recently. Pricing for the service has yet to be revealed, though obviously, it’ll cost less than Netflix’s $10-per-month, ad-free Basic plan.

The company hasn’t shared a launch date for the ad-supported version of its streaming service, though recent reports have suggested it will land early next year, with the help of Microsoft.

Sarandos’s comments came as Netflix released its latest set of financial figures that showed the company pulling in a profit of $1.4 billion for the second quarter of 2022. It also lost a million subscribers in that period, though it expected to lose twice that. Things look a little brighter going forward, however, with forecasts suggesting the service will start gaining members again after losses over two quarters in a row, with a million new ones expected to sign up. Netflix currently has around 222 million users globally.

Editors' Recommendations

Topics

Contributing Editor

Not so many moons ago, Trevor moved from one tea-loving island nation that drives on the left (Britain) to another (Japan)…

Audio / Video

The 10 most popular streaming services, ranked by subscriber count

The Netflix home screen.

Let's start this with a caveat or two: If you're going to compare streaming services merely by the number of subscribers they have, it's not exactly a fair fight. Not all services are available in the same places. Nor does the number of subscribers really address the "worth" of a streaming service. Or whether it's easy to use, or if the apps are any good. Or, for that matter, if a given streaming service has what you want to watch, which really is the only measure necessary.

Still, it's interesting to keep up with how things are doing from a global perspective, especially when you have relatively young upstarts like Apple TV+ gaining so many accolades in an industry dominated by Netflix.

Audio / Video

Netflix to hide its subscriber numbers starting in 2025

Netflix on a TV screen showing on the Roku home screen.

Netflix today announced that it no longer will report quarterly subscriber numbers and how much money it makes per membership, starting with its earnings report for the first quarter of 2025 (which will come this time next year). The news, which really is only of use to the financial community and those of us who pay attention to this sort of thing for a living, came in the company's Q1 2024 earnings report.

"We’re focused on revenue and operating margin as our primary financial metrics -- and engagement (i.e. time spent) as our best proxy for customer satisfaction," Netflix wrote in its quarterly letter to shareholders. "In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential. But now we’re generating very substantial profit and free cash flow (FCF). We are also developing new revenue streams like advertising and our extra member feature, so memberships are just one component of our growth."

Entertainment

If you have to watch one Netflix show this April, stream this one

A man stands close to a woman in Black Sails.

The best thing about Netflix is that there's almost never a shortage of new things to watch. In the first half of April, we've already seen the premiere of prominent original series including Ripley, Parasyte: The Grey, and Good Times, as well as the arrival of Sex and the City on loan from HBO and Max. But if you have to watch only one Netflix show this April, then the one you can't miss is Black Sails.

In 2014, Starz launched Black Sails as an original series in the vein of Spartacus, as well as the short-lived Camelot. This was also a post-Game of Thrones TV landscape, and Starz wanted to make a splash of its own. Since HBO had a such death grip on the fantasy genre, Starz went ahead with a show that's both a historical epic and also a prequel to Robert Louis Stevenson's classic adventure novel Treasure Island. Even if you've never read Stevenson's book, almost everyone has heard of its most iconic character, Long John Silver. And while hedoes play a large role in Black Sails, the primary focus is on a lesser-known character from Treasure Island: Captain James Flint.