Netflix will offer its lowest cost tier in some time with a $7.00 ad-supported tier. Some analysts see the move as a shot across the bow at Disney which announced an ad-supported plan that simply costs the same as the current cost of Disney+. Essentially instead of reducing costs with ads Disney may as well have said “We are raising the cost of the current plan, you’re welcome”. Netflix on the other hand will give users a break on the cost of the service in hopes that its customers will make up for paying less money per month by producing more profits via advertising. It is more like the Hulu model. Hulu has far more customers who subscribe to the ad-supported service than it does to the ad-free tier. But it should be noted that Hulu began as an ad-supported service while Netflix did not.
The moves towards ads are believed to be both aimed at reeling in the few hesitant fence-sitters in the US but also more importantly aimed at the international audience in developing countries that may find the current price of the service cost prohibitive.