Netflix remains optimistic about its ad-supported subscription service, Netflix Basic with Ads, despite a lukewarm response from users.

Data from research firm Antenna reveals that only 9% of new U.S. subscribers opted for this tier in the month following its launch in November 2022. However, Netflix's leadership has expressed satisfaction with the plan's growth trajectory.

Jeremi Gorman, the streaming giant's president of worldwide advertising, shared insights during Variety’s CES 2023 entertainment summit. He indicated that discussions are actively taking place to revise content agreements that initially excluded advertising video on demand (AVOD) rights.

This means that the library of content accessible through Netflix Basic with Ads is expected to expand. Currently, this budget-friendly subscription, priced at $6.99 in the U.S. (and equivalent rates in other currencies), offers approximately 85% of the content available on the standard Netflix plan. Notably, many of the platform's top shows and films are already included.

Since its debut, Netflix Basic with Ads has required subscribers to watch up to five minutes of advertisements per hour and limits streaming quality to 720p. Additionally, users cannot download content for offline viewing with this plan.

Update: Improvements are on the way for picture quality and the number of streams available on the Basic with Ads subscription.

Currently, Netflix offers an ad-supported subscription plan priced at $6.99 in the US, £4.99 in the UK, and AU$6.99 in Australia.

However, this new tier has not gained much traction. Users and critics have raised concerns about the erratic nature of ad placements, which detracts from the ad-free experience that many streaming services initially promised.

Netflix, however, has a different perspective. At CES 2023, Gorman highlighted that the platform believes its diverse range of advertisements from various sectors—including consumer goods, luxury brands, automotive, and retail—enhances the overall consumer experience.

Moreover, Netflix is not alone in venturing into ad-supported models this year. Warner Bros. Discovery plans to maintain a budget-friendly ad-supported tier following the merger of HBO Max and Discovery Plus. Similarly, Disney plans to keep its ad-supported option on Disney Plus active and thriving.

The decision to opt for lower-cost streaming options ultimately hinges on individual preferences and circumstances.

While the idea of watching your favorite Netflix, Disney+, or HBO Max content interrupted by advertisements for up to five minutes each hour may not be appealing, these ad-supported plans represent some of the most affordable streaming options available today.

For instance, Netflix offers a subscription plan at just $6.99 / £4.99 / AU$6.99 per month, allowing fans to enjoy popular series such as Stranger Things, Squid Game, The Crown, Sex Education, and Bridgerton. The catch? Viewers will encounter 15 to 30-second ads before and during their shows.

The shift towards ad-supported services is largely driven by streaming companies' need to enhance profitability. However, it also presents an opportunity for viewers seeking cheaper alternatives, albeit with the trade-off of commercial interruptions. In contrast, Netflix's premium subscription tier currently stands at $19.99 / £15.99 / AU$22.99.

Concerns arise when streaming services increase prices for their ad-free subscriptions to accommodate new ad-supported tiers. For example, while Netflix's existing subscription prices remained stable after launching its ad-supported plan, Disney+ experienced significant price hikes shortly after introducing its own ad-supported offering.

If Netflix were to adopt a similar pricing strategy in 2023, the confidence its executives have in the success of ad-supported plans could be put to the test.

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