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Netflix Cheaper Ad-Supported Plan Reportedly Won’t Allow Downloads for Offline Viewing

·3 min read

Netflix may not let subscribers on its forthcoming ad-supported streaming plan download TV shows or movies to mobile devices, a feature that’s proven to be popular among the streamer’s regular customer base.

Last month, Netflix said it expected to launch the ad-supported plan in early 2023. The streamer has not announced pricing or other details.

According to a report by Bloomberg, code in Netflix’s iPhone app, discovered by an independent developer, included text that said, “Downloads available on all plans except Netflix with ads.” In addition, information in the app’s code indicated users on the plan with ads won’t be able to skip commercial breaks.

Netflix would not confirm the Bloomberg report.

“We are still in the early days of deciding how to launch a lower priced, ad-supported option and no decisions have been made,” a company rep said. “So this is all just speculation at this point.”

Netflix introduced downloads for offline viewing in 2016, and has since added enhancements such as letting users automatically download the next episode in a TV series they’re watching.

In announcing Q2 earnings, the company told investors that the ad-supported plan will first be available “in a handful of markets where advertising spend is significant,” presumably including the U.S. “Like most of our new initiatives, our intention is to roll it out, listen and learn, and iterate quickly to improve the offering,” Netflix said in its quarterly letter to shareholders. “So, our advertising business in a few years will likely look quite different than what it looks like on day one.”

Last month, Netflix announced a pact with Microsoft to serve as its exclusive advertising partner. On the company’s Q2 earnings interview, COO and chief product officer Greg Peters confirmed that, at least initially, Netflix ads will be sold exclusively by Microsoft.

Not all content on the no-ads Netflix subscription plans will be available in the advertising version, said Ted Sarandos, co-CEO and chief content officer. “The vast majority of what people watch on Netflix we can include in the ad-supported tier today,” he said on the July 19 earnings interview. “Some things we’re in conversations with studios on,” Sarandos said in the recorded earnings interview. “We will clear some additional content. Not all of it. I don’t think it’s a material hold-back to the business.”

Netflix’s planned ad-supported service is part of its strategy to find a new source of revenue growth, along with cracking down on users who share passwords with those outside their household, as its subscriber rolls have shrunk in the first half of 2022.

“Over time, our hope is to create a better-than-linear-TV advertisement model that’s more seamless and relevant for consumers, and more effective for our advertising partners,” Netflix said in the Q2 earnings letter. “While it will take some time to grow our member base for the ad tier and the associated ad revenues, over the long run, we think advertising can enable substantial incremental membership (through lower prices) and profit growth (through ad revenues).”

Wall Street analysts believe Netflix’s advertising tier won’t cannibalize its existing subscriber base and could actually help it gain total subscribers and drive up average revenue per user. Peters, on the Q2 earnings interview, said Netflix believes the per-subscriber economics on the ad-supported plan will be “neutral” with — or better than — what it sees with traditional subscribers.

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