Canadian Netflix users will see a new membership option starting Tuesday that costs less but comes with a catch: commercial breaks inserted into their favourite shows.
After years of uninterrupted binge-watches, the worldB次元官网网址檚 largest streaming service is making way for a word from its sponsors. And as inflation continues to pinch consumers, the proposal of a cheaper Netflix plan may sound enticing to some.
Netflix isnB次元官网网址檛 alone in believing that commercial television is back in a big way.
Several free ad-supported streaming services will launch in Canada over the coming weeks, all of them built on a business model that taps into the countryB次元官网网址檚 multi-billion advertising industry to finance and acquire programming.
Analysts say together the platforms could reshape how we watch and pay for television. More viewers are complaining that streaming costs have soared near the level of their old cable bills, which has pressured each service to reconsider its business model.
B次元官网网址淐onsumers are faced with more choice, more platforms and are making more deliberate decisions as to which streaming services they keep and which ones to cancel,B次元官网网址� said Justin Krieger, senior technology and media analyst at consultancy firm RSM Canada.
Of the newcomers, Pluto TV debuts on Dec. 1 with more than 100 channels of free TV series, movies and sports that stream B次元官网网址渓iveB次元官网网址� online on a platform that mimics the experience of channel surfing, complete with the commercials.
Around the same time, CBC introduces a revamped free streaming news channel that will be available on CBC Gem and multiple other streaming platforms. A flagship program hosted by Andrew Chang of B次元官网网址淭he NationalB次元官网网址� will be the main attraction with advertisements will be interspersed throughout the day.
South of the border, Disney Plus rolls out an ad-supported option later this year with some industry observers predicting it will apply the same model in Canada soon after. The ad tier will be introduced at the price of DisneyB次元官网网址檚 existing commercial-free service. Subscribers who want to eliminate the ads will have to pay a premium.
Each service has its own reasons for getting into the ad business.
For Netflix and Disney, one of the main drivers is growing revenues as programming costs soar and competitors lure away subscribers.
Meanwhile, the free streaming services use ad revenues to fund a slate of original and licensed programming, which puts incredible pressure on Netflix to maintain its leading position with attractive new films and shows.
NETFLIXB次元官网网址橲 PITCH
Earlier this year, after repeatedly swearing off the possibility of ever getting into advertising, Netflix changed its tune by announcing it would launch an ad tier for subscribers in key international markets.
In Canada, the B次元官网网址渂asic with adsB次元官网网址� plan costs $5.99 per month B次元官网网址� less than the plans without ads, which start at $9.99 and peak at $20.99 a month.
As a trade-off for the savings, Netflix says subscribers will be presented with an average of four to five minutes of ads per hour played before and during their TV shows and films.
B次元官网网址 quality on the Netflix ad plan tops out at 720p, leaving full high-definition streaming at 1080p and 4K for premium subscribers. Viewers also wonB次元官网网址檛 be able to download titles on their devices and not everything in the serviceB次元官网网址檚 library will be available.
Those restrictions will sour the appeal to many Netflix devotees, suggested Carmi Levy, a technology analyst based in London, Ont.
He said Canadians were sold the idea of a commercial-free Netflix a decade ago which led other entrants in the market to mimic their approach with similar models.
ThatB次元官网网址檚 different than the United States where Peacock, Paramount Plus and HBO Max all offer less expensive ad tiers as a subscription option, while Crackle and AmazonB次元官网网址檚 Freevee are among the major players in free, ad-supported platforms.
B次元官网网址淐anadians donB次元官网网址檛 have that legacy of experience and as a result may be more resistant to the way Netflix is introducing that service,B次元官网网址� he said.
B次元官网网址淚tB次元官网网址檒l take time for Netflix and others to educate Canadians on the advantages of paying less for a streaming service and getting ads served up in return.B次元官网网址�
DO CANADIANS WANT ADS?
Kaan Yigit, a technology analyst at Solutions Research Group, said a survey conducted by his firm earlier this year found U.S. viewers have already adopted ad-supported subscription options.
About 40 per cent of HBO Max subscribers signed up for its lower-priced ad tier, he said, while an average of 58 per cent of subscribers used the cheaper versions of Paramount Plus and Peacock.
He estimates a modest 20 per cent of Canadian Netflix subscribers will join the ad tier over the next 12 to 18 months.
However, NetflixB次元官网网址檚 initial sign-up numbers wonB次元官网网址檛 be the best indicator of long-term success for the ad model, suggested Levy.
Subscribers who joined for a deal could be turned off if the ad breaks become as long as they are on network TV stations, which typically air 20 minutes of commercials per hour.
B次元官网网址淭he devil is always in the details whenever a streaming provider introduces an ad-based tier,B次元官网网址� Levy said.
B次元官网网址淲hat matters most is how intrusive that presentation of ads is to the overall viewing experience. And if it is intrusive in the way that consumers have long complained about traditional broadcast television ads, then this could very well be a non-starter for Netflix.B次元官网网址�
THE AD AGENCIES
Until those intricacies play out, advertising agencies say their clients are salivating over the prospects of new placement options in the Canadian market.
B次元官网网址淲hat weB次元官网网址檙e seeing is a lot of initial excitement and questions around Netflix, in particular,B次元官网网址� said Marissa Cristiano, an account director at Cossette who says sheB次元官网网址檚 B次元官网网址渆xploringB次元官网网址� ad buys on the service with some clients.
B次元官网网址淭heyB次元官网网址檝e done a really good job of creating B次元官网网址� the type of content that brands really do want to ally with.B次元官网网址�
Cherie Hill, senior vice president of media at marketing firm Society, Etc., said she anticipates Netflix ads will be angled toward B次元官网网址渂udget-consciousB次元官网网址� shoppers, with a strong focus on consumer staples, household items and car companies.
She doesnB次元官网网址檛 anticipate much blowback from viewers, mainly because Netflix is making it an opt-in proposition.
B次元官网网址淚f youB次元官网网址檙e choosing to have the commercials, itB次元官网网址檚 not going to leave a negative experience,B次元官网网址� she said.
B次元官网网址淭heyB次元官网网址檙e providing an option and theyB次元官网网址檙e managing expectations.B次元官网网址�
David Friend, The Canadian Press
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