Netflix (NASDAQ: NFLX) plans to introduce an ad-supported tier to its streaming service in 2023. The shift comes after a slew of competitors entered the market, most of which are priced well below Netflix's standard plan pricing of $15.49 per month.

While an ad-supported tier will help Netflix compete on price, it has a lot of potential to hit its competition where it really hurts: by cutting into television ad spending. With much of Netflix's new competition still generating most of their revenue from linear TV, it could put more pressure on their streaming businesses to generate profits by raising prices.

There's a lot of enthusiasm about the potential for Netflix's advertising sales. "We've seen a lot of excitement in our early discussions with brands," COO Greg Peters said during the company's second-quarter earnings call. Ultimately, Netflix wants to build "a better-than-linear-TV advertisement model," management wrote in its letter to shareholders.

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Source Fool.com