What you need to know
- Netflix recently announced its Q2 2022 financial earnings.
- The company says that it plans to launch its ad-supported tier in early 2023.
- Co-CEO Ted Sarandos says that not all content will be available on the ad-supported tier.
Netflix is in the middle shift as it prepares to launch its ad-supported tier to attract more subscribers to the streaming service. However, as the company finalizes details of said subscription plan, more details continue to emerge, with company executives suggesting that the ad-supported tier will have some notable limitations.
During the earnings call, Netflix executives were asked to provide details on the upcoming ad-supported tier, which it's partnering with Microsoft to provide. One question focused on how the tier would affect deals with content providers who make their movies and shows available to stream on Netflix.
Co-CEO Ted Sarandos said during the call that if the new ad-supported tier were to launch today, Netflix would be able to include the "vast majority" of content that's already available. "But if we launched the product today, the members in the ad tier would have a great experience. He noted that Netflix is currently in talks with studios to bring additional content to the ad-supported tier, "but certainly not all of it."
It's certainly not unheard of for streaming services to limit their cheaper tiers in order to give subscribers a reason to consider upgrading. When HBO Max launched its ad-supported tier last year, it brought several limitations, including the lack of 4K streaming, no offline downloads, and no same-day releases for new movies.
It's unclear at the moment if of how Netflix will further limit this cheaper tier when it launches in early 2023. However, knowing that some content won't be available is already a reason to give some prospective subscribers pause when considering the new plan.
That said, despite Netflix's recent woes regarding subscriber losses, the company provided a positive outlook on its Q3 guidance, with subscriptions expected to trend upwards once more. CEO Reed Hastings also has a positive outlook on Netflix's prospects over the next decade as he expects streaming to finally bring about the end of linear TV.
"... looking forward, streaming is working everywhere. Everyone is pouring in. It's definitely the end of linear TV over the next five/ten years, so very bullish on streaming."
