Netflix disparaged its rival Amazon during a quarterly call, as the ecommerce giant plans to launch ads in Prime Video starting next week.
Netflix co-CEO Greg Peters responded to a question at the fourth-quarter earnings call about whether the company has thought about setting ads as the default choice.
“We did consider making it the default option, but given our long history of not having ads, we thought it was better for our members – rather than force them into a change and give them ads – better to attract them to the ads plan for the ones that wanted it, with the benefits,” Peters said.
Starting on January 29, Amazon will introduce a new subscription model. By making ads the default option, the company hopes to achieve a broader scale from the outset compared to Netflix, targeting 115 million monthly users.
One of the notable advantages includes a substantial price difference as Netflix’s ad-supported tier is priced at $7 per month, which is less than half the cost of its ad-free counterpart. Amazon announced the introduction of ads to the video streaming component of its Prime service in September, priced at $14.99 per month or $139 per year. These ads will also be included in the standalone Prime Video membership plan, which costs $9 per month.
Netflix’s standard ad-free tier is priced at $15.49 per month and excludes features such as 4K support, access to the complete library, the option to add two additional members, and multi-device viewing. For these premium features, the cost rises to $22.99.
In its earnings report, the company revealed that 40% of its new sign-ups are opting for the ad-supported tier in the markets where it is available. What’s more, according to Peters, there has been no significant backlash against this strategy.
Netflix’s ad-free plans
At the same time, the company said it would phase out the ad-free Basic plan in certain countries where ad-supported plans are offered. This change will begin with Canada and the UK in the second quarter of this year. This means that subscribers would have to fork out $15.49 per month as Netflix’s cheapest ad-free plan.
Alternatively, subscribers can opt for the ad-supported basic plan at $6.99 per month, or the Premium tier at $22.99 per month. Last year, Netflix halted new sign-ups for its Basic plan in Canada, before implementing this change in the US and UK, according to the Verge.
Peters elaborated on the company’s strategy, stressing the need to leverage their unique strengths in the competition for advertising spend. He said, “We’ve got an incredibly engaged audience, the most engaged audience who are watching the most culture-defining films series and live events. That is an important place for brands to be and it’s something that differentiates us from our competitors.”
As a result, Netflix also disclosed a surprising 10-year agreement to broadcast WWE’s Monday Night Raw. Valued at $5 billion, this deal marks the transition of the live weekly show to streaming, after more than thirty years on linear television.
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