this post was submitted on 19 May 2024
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The funny bit to me is how obvious they are about restructuring their business model. Netflix clearly wants a greater proportion of their revenue to come from advertisers, so they're charging exorbitant prices for the 4K and, in particular, standard plan while keeping the "ad-supported" plan fairly low. They were probably seeing waves of short-term subscribers in response to big releases and are trying to bait those people into staying subscribed permanently while also milking then through advertisements. I wouldn't be surprised if the standard plan is removed at some point because it's such bad value now.
Edit: I see now the article is about Australia. And the price is higher, but converting to USD the new price is still less than US $15.49 which I feel is fair. It costs me about $13.50/month in electricity for plex.
How is the standard plan a bad value? It's $15.49 for 1080p no ads. I dropped 4k a while ago because they went stupid on the price, and I will never use ad supported. If they made the ad tier free, I'd still pay the $15.49/month. Standard plan hasn't been hit with the last several price increases, which is why I still think it's a good value, and why I'm still subscribed.
I'm sure with the way things are going Netflix will end up pushing me away eventually, but they haven't yet. Dropping standard would cause me to cancel. I also have the Disney/Hulu bundle for $20 and plex for anything else. I could easily get anything on Netflix on plex.
Because of how it is priced relative to the other tiers. It is significantly closer in price to the highest tier ($7 gap) despite being almost identical to the lowest tier in terms of features ($11 gap). The only meaningful difference is ads. It's very clear that Netflix is trying to price out customers who are unwilling or uninterested in paying for all the features limited to the highest tier (4K, double the simultaneous streams, better audio, etc) and force them on to the cheaper, ad-supported plan instead because they believe they can make more money this way.
Additionally, the middle tier is priced closer to the highest tier to imply that the highest tier is great value (because it has so many extra features for a smaller price increase than between the lowest tier and the middle tier). This is a classic retail strategy designed to trick consumers into spending more money than they originally needed or wanted to because "it's better value". Consumers often conflate "better value" with "saving money", even though they are doing the complete opposite when they pay $7 more for features they didn't initially care about at all.
There is a pretty big gap between ad supported and standard. Wonder if ads actually makes up for the difference or if it's just under priced to push people towards it. But seeing as ads are like cancer to me I don't even consider that tier as existing. So 15.49 1080p 2 screen, or 22.49 I think for 4k 4 screens. I sit far enough away that I don't notice the benefits of 4k and don't need the extra screens so I just judge the value from the content and price. Honestly I'd rather just have everything on plex instead of jumping between services, but some stuff that family watches is hard to find. Sonarr has probably 100+ episodes of reality TV crap that won't download as no seeders.
The ads are almost certainly making up the difference and then some, otherwise I don't see why Netflix would pursue that strategy at all. The only other theory I can think of is that people are less likely to initially cancel an $8 monthly subscription than a $19 subscription, and are therefore more likely to forget to cancel it in the future.
Like the rest of the tech industry, Netflix is way past the point of making a loss just to drive growth and is now obsessed with driving maximum profits because their shareholders are demanding (or are owed) returns on the big investments they made in a different financial climate years ago. That's why Netflix is introducing ads, pushing up prices and cracking down on shared subscriptions (and now even a one-off payment to "add" an account member from outside of your household) and cancelling projects with real artistic merit at short notice when they don't show immediate signs of becoming the next massive hit. It's all about making as much money as possible now. We are no longer in the age of focusing on providing a reasonably priced and objectively good service and that will drive people back to piracy, just as it has done previously.
I reckon you guys are on the right track with your comments. Something to add in relation to why streaming services are introducing an ad tier. Introducing adverts introduces variable pricing for the streaming services. Meaning they can earn the same base rate, but for say the next season of Bridgerton, or one of their other really popular shows they can make a kind of 'super profit' by selling the ad space on top of their base rate per subscriber account.