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Netflix considers offering its streaming service for free

Netflix is exploring the possibility of introducing free versions of its entertainment streaming service in select international markets, writes Bloomberg.

This would be rolled out mainly in Asian and European markets – but may not necessarily exclude South Africa – as part Netflix’s strategy to expand its audience.

Previously, Netflix tested a free plan in Kenya, but the initiative was discontinued in 2023.

Now, the company’s top executives are considering whether to launch a free service in larger markets. In particular, those with popular free-to-air TV networks where the streaming platform also sells advertisements, such as Japan or Germany.

In the United States, where Netflix already has a substantial customer base, there are no plans to offer a free service. Right now, the free service concept is still in the discussion phase.

Nonetheless, a free service is being seen as a way to help the organisation reach potential users who are unable to afford the subscription, or lack convenient payment methods.

Netflix is a ‘minnow’ when it comes to advertising

Offering a free service would also help the company overcome one of its major current challenges: increasing its advertising inventory.

Despite being a dominant player in video streaming, Netflix remains a relatively small player in the advertising arena.

“They’ve been slow to scale,” noted one prominent advertising executive in the Bloomberg article. Currently, Netflix ranks around the ninth or tenth largest in online video advertising and often charges nearly twice as much as its competitors.

Given credit for moving quickly into ads

Netflix has, however, been recognised in advertising for its ability to adapt quickly. When the company’s growth slowed in late 2021, Netflix’s CFO campaigned for a cheaper, ad-supported subscription tier, convincing co-founder Reed Hastings of its potential.

In under a year, Netflix developed an advertising arm, partnering with Microsoft Corp. This partnership guaranteed Netflix a level of advertising sales, while Microsoft benefitted by securing a high-profile client for its emerging video advertising business.

The introduction of the cheaper, ad-supported tier provided an entry point for the more cash-conscious customers, including those who had been sharing accounts.

In this regard, the advertising tier has been a big success.

“We’re making good progress there,” said Netflix co-CEO Greg Peters. “But look, we’ve got much, much more to do in terms of scaling.”

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