Commercials May Be Coming to Streaming Platforms—Here’s Why

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Streaming services that revolutionized ad-free TV are starting to add commercials to their platforms. As a result, subscription prices for “no ad” plans are increasing. Some of the biggest streamers have already rolled out subscription plans that include commercials for a lower price, while others have announced that these options will be coming soon. 

HBO, one of the first cable networks to introduce commercial-free television, recently began including ads before feature films on its streaming platform, HBO Max. In March, Disney+ announced that a subscription option with commercials will be available at a lower price later this year. The streamer joins others, including Peacock and Paramount+, in offering ad-inclusive plans for a smaller monthly fee.

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Netflix, which has become one of the world’s dominant platforms since it began streaming original content in 2013, said it has no plans to add commercials—at least not “right now,” said chief financial officer Spencer Neumann. However, Netflix hasn’t completely shut the door on the idea; Neumann added that the streamer would “never say never” to adding a cheaper ad-supported tier.

When asked about Disney+’s decision to introduce commercials, the CFO quipped, “I don’t think I’ll get it.”

Though Netflix is not yet planning to include ads as part of a subscription option, the streamer did raise prices across all its monthly plans, which went into effect late last month. In the U.S., the basic plan went up by $1 to $9.99 per month; the standard plan went up by $1.50 to $15.49; and the premium plan went up by $2 to $19.99. Amazon followed suit, announcing in February that it will be hiking up its annual Prime subscription fee to $139 a year—a $20 increase.

Platforms across the industry are making changes in large part because streaming originals are becoming increasingly popular with viewers. As audiences continue to turn to streamers as their preferred mode of media consumption, companies are rapidly growing their original content offerings. 

More content means higher production costs across the board, and the two methods used to subsidize those costs are subscriber fees and advertising revenue. But because streaming is now so popular, there are fewer and fewer new subscribers out there to acquire. As such, platforms are left with just one way to bring in more money: advertisements. 

This story originally appeared in the Apr. 7 issue of Backstage Magazine.