Netflix put ads on screen: a $6.99 ad-supported plan set for 3 Nov 2022 after sub drop

Subscription video streaming with nearly 221 million paying members worldwide as of mid-2022.

That a cheaper tier with four to five minutes of ads per hour can restart growth by reaching price-sensitive viewers and some of ~100 million account-sharing households.

The 2020 lockdown surge masked stalling growth: 2021 was Netflix's weakest year of subscriber growth, and the first half of 2022 brought the first decline in more than a decade, with the stock wiping out more than US$200 billion of shareholder wealth in 11 months. Per the report, the 15-year-old streaming service decided on a new direction about six months before the announcement.

On 13 October 2022 Netflix confirmed the ad plan would launch on 3 November. In Australia it would cost A$6.99 a month, about a third less than the ad-free entry option, with four to five minutes of ads per hour, no offline downloads and a 'limited' number of programmes unavailable. Shares rallied on the announcement but stayed about two-thirds below their November 2021 peak.

First structural crack: the first subscriber decline in over a decade forced a new growth engine, decided about six months before the announcement.

The ad tier attacks the price wall — about a third cheaper in Australia — without touching the price of ad-free plans.

Roughly 100 million account-sharing households are an audience ads can monetise without forcing each viewer onto a full-price subscription.

Amazon, Apple and Disney were entering, free ad-supported platforms were growing, and inflation was squeezing discretionary spending.

When growth stalls, a cheaper ad-funded tier can reach price-sensitive viewers and account-sharers without cutting the price for existing subscribers.

As of the 13 October 2022 announcement the plan was scheduled to go live on 3 November 2022, priced at A$6.99 in Australia; no sign-up figures existed yet. Netflix still faced competition from Amazon, Apple, Disney and free ad-supported streamers like ABC iview and SBS, with inflation pressuring household spending.