Australia markets open in 9 hours 15 minutes

    -11.90 (-0.15%)

    +0.0006 (+0.09%)
  • ASX 200

    -12.00 (-0.15%)
  • OIL

    -0.55 (-0.69%)
  • GOLD

    -6.30 (-0.26%)
  • Bitcoin AUD

    +5,399.69 (+5.39%)
  • CMC Crypto 200

    +44.03 (+2.96%)

Netflix confirms ads are coming soon

Netflix headquarters in the US
Netflix lost 200,000 subscribers in the first quarter of this year. (Source: Getty)

Netflix has announced it will soon be launching a lower-cost subscription plan, but there's a catch – viewers will have to watch ads.

Up until now, Netflix has been hailed for being an ad-free streaming service, which relied instead on increasing subscription costs to grow.

But, after losing 200,000 subscribers in the first quarter of this year and an expected 2 million to follow in months to come, the company is turning to advertising.


The new plan will see Netflix use advertising to help fund a lower-tier subscription to lure people back to the streaming service.

Netflix banking on untapped customer segment

During an interview at last month's Cannes Lions festival, Netflix's co-chief executive, Ted Sarandos, confirmed the ad-supported subscription plan would roll out soon.

"We've left a big customer segment off the table, which is people who say: 'Hey, Netflix is too expensive for me and I don't mind advertising'," Sarandos said in Cannes.

"We're adding an ad tier for folks who say, 'Hey, I want a lower price and I'll watch ads'."

Woman watching Netflix and using TV remote
The new, lower-cost Netflix plan will be available for viewers who don't mind watching ads. (Source: Getty)

Sarandos assured Netflix fans that, although ads wre coming, they would only be shown to lower-tier subscribers.

Media reports from June alleged Netflix was in discussions with Alphabet's Google and Comcast's NBCUniversal for potential marketing partnerships.

When asked which company Netflix was partnering with for advertising, Sarandos responded: "We're talking to all of them right now."

Netflix joins Hulu, Paramount+ by launching ad-supported plan

Netflix joins the ranks of streaming services Paramount+, Discovery+, Peacock, Hulu, and HBO Max by offering a cheaper, ad-supported tier for subscribers.

Hulu's ad-supported plan is available to US subscribers for $US6.99 ($AU10.17) per month, while HBO Max is available for $US9.99 ($AU14.54) per month.

Netflix currently offers three payment tiers for streaming access for a fixed monthly fee, with plans including Basic, Standard and Premium.

Australian Netflix prices start at $10.99 for the Basic, $16.99 for the Standard and $22.99 for the Premium plan.

The company hasn't revealed when its new ad-supported subscription tier will be rolled out in Australia.

Netflix lays off 450 staff after rough year

Last week, Netflix announced it had laid off 300 employees, around 4 per cent of its overall staff.

The layoffs marked the second round of job cuts for Netflix, following 150 layoffs in June.

"Today we sadly let go of around 300 employees," A Netflix spokesperson said.

"While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth."

While the layoffs primarily affect teams in the US, employees across Netflix's Singapore, Tokyo, Mumbai, Seoul, Argentina and European offices have also been impacted.

Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to the free Fully Briefed daily newsletter.