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

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.

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