Netflix subscribers in Canada can now get a break on the price — if they don't mind watching ads

Netflix essentially killed every part of the conventional television business when it launched a streaming video service 15 years ago. But now that it's facing an existential threat of its own from upstarts closing in on all sides, it's borrowing from the playbook of its old rival to save itself: advertising.

Starting on Tuesday, Netflix will offer a version of its popular streaming service at a deeply discounted rate of $5.99 a month. But there's a catch: Instead of the current subscription packages that allow users to endlessly and uninterruptedly binge on content to their heart's content, the new no-frills version with a smaller content library will intersperse ads before, after and even during shows.

It's a throwback to the commercial breaks that pay for the programming on conventional television.

It may seem odd to see the streaming industry come full circle — from being an alternative to cable TV packages that spliced 15 minutes of advertising into every hour of content, to reverting to a model that it eliminated.

But it's a sign of how inflation and higher costs have inched into every part of the economy.

The streaming service is also taking steps to crack down on subscribers who share their passwords with friends, family and even co-workers — a routine practice but one that's not allowed outside a household. Netflix didn't seem to care much about password sharing, since the company was growing so fast it was confident that anyone who got a taste of its content for free would eventually sign up themselves.

But that started to change this year, as high inflation prompted consumers to keep a closer eye on their spending dollars, and the company posted back-to-back subscriber losses for the first time in its existence.

So in addition to raising prices for its ad-free subscriptions, Netflix will require subscribers to pay an extra fee if they want to share their password, starting in early 2023.

"They're losing a lot of revenue, by all the shared accounts," Vincent Georgie, director of the School of Creative Arts at the University of Windsor, in Windsor, Ont., said in an interview with CBC News.

"They don't want to lose people altogether, they want to push them toward these lower-cost subscriptions."

The ad-supported version of Netflix will cost $5.99 and only be available on one device, with no high-definition content. That's different from ad-free versions that start at $9.99 a month and go all the way up to $21.99 for subscriptions with all the bells and whistles.

Georgie said the industry is on the cusp of major consolidation, because "the average consumer is not going to sustainably maintain two, three, four, five or six different streaming subscriptions."

It's no coincidence that Netflix is rolling out a cheaper ad-supported version just as millions of people who were using the service without a subscription are about to be blocked from doing so.

"If they're able to capture 60 per cent of those users, that would be a nice uptick," Georgie said.