- Netflix will offer ad-supported streaming for about $7 per month starting in November.
- The company lost customers in the first half of the year, so this is an effort to bring in new customers.
- “Basic with Ads” costs $6.99, $3 cheaper than Netflix’s lowest-priced package without ads.
Netflix said on Thursday that it will offer a streaming plan with ads for about $7 per month starting in November.
The company lost customers in the first half of the year, so this is an effort to bring in new customers.
“Basic with Ads” costs $6.99, $3 cheaper than Netflix’s lowest-priced package without ads. Over 10 days, 12 countries—including the US, Brazil, Germany, Japan, and Korea—will launch the new choice.
Netflix says subscribers will watch four to five minutes of advertising per hour. To maintain a cinematic experience, new films will have little advertising.
Greg Peters, the head of operations at Netflix, told reporters that licencing issues will keep the ad-supported service from offering 5–10% of Netflix’s content.
Late in the afternoon, Netflix shares rose 5.4% to $232.86. Before Thursday, the stock had plunged 62%.
Netflix officials had long opposed ads. They changed their minds in April when the company shocked Wall Street by losing subscribers in the first quarter and anticipated further defections.
“We at Netflix have a huge opportunity ahead to grow our unit and attract more subscribers. And part of that is having a wide range of pricing plans,” Peters said.
Peters declined to estimate how many users would sign up for the ad-supported option or how much Netflix might earn. Earnings on Tuesday will include fourth-quarter predictions.
In a research note, Cowen & Co analyst John Blackledge called advertising a “major opportunity to unleash member growth” among price-sensitive users.
The Wall Street Journal said that Netflix wanted 13.3 million US ad-supported viewers by the third quarter of 2023.
Hulu, Disney+, and HBO Max, among others, offer cheaper ad-supported plans. Commercial plans cost $8–10 per month.
Netflix, famed for “Stranger Things” and “Squid Game,” had 220.7 million paid customers in June, down roughly 1.2 million from January. The third quarter was expected to add 1 million customers.
Netflix will launch its ad-supported plan in Canada and Mexico on Nov. 1 and in the US, Brazil, Italy, Germany, Australia, Korea, and Japan on Nov. 3.
On Nov. 10, Spain will be the next country to join.
“They’re very well positioned because they’re a premium brand, and marketers are extremely interested in being aligned with quality content,” said Greg Kahn, a media consultancy business founder and former ad industry executive.
“There’s much more potential in gaining revenue and gaining a new subscriber base,” Kahn said of the new ad-supported programme.
Jeremi Gorman, Netflix’s president of worldwide advertising, said that when the new tier came out, almost all of Netflix’s ad space was taken up by automakers, consumer packaged goods companies, and luxury brands.