The Netflix logo is seen on a TV remote, in this illustration taken January 20, 2022.
Dado Ruvic | Reuters
netflix will charge $6.99 per month for its new ad-supported tier, which the company will roll out in the US on November 3.
Netflix’s “Basic with Ads” tier will average four to five minutes of ads per hour and won’t give users the ability to download movies and TV shows. A limited number of TV series and movies will initially be unavailable due to licensing restrictions.
Ads will be 15 or 30 seconds long and will run before and during Netflix content. Companies will have the ability to block ads from appearing on content they deem disreputable or inappropriate. To help advertisers understand its reach, ratings company Nielsen will use its standard digital audience measurement, Digital Ad Ratings, in the United States starting in 2023.
Netflix launches its first cheaper plan with ads after years of rejection the concept. Moving comes as subscriber growth has plateaued in recent quarters. netflix subscribers lost in the first two quarters of this year and expects to add just 1 million customers in the third quarter. The company has approximately 221 million subscribers worldwide, making it the world’s largest streaming service.
Netflix will announce its third-quarter results after the market closes on Tuesday and plans to release subscriber forecasts for the advertising service, according to chief operating officer Greg Peters. Netflix partners with Microsoft for its ad-supported service. The streaming company will have hundreds of advertisers at launch and has nearly depleted its inventory, the company said on a conference call with media.
Initially, there will be no advertising in children’s shows and new movies. Older movies may have a mid-roll ad.
‘Netflix’s Price of $6.99 per month is cheaper than ad-supported Disney+ and Hulu, both of which will cost $7.99 per month when Disney+’s ad tier launches in December. HBO Max with ads costs $9.99 per month.
Netflix has priced the service so that any customer who switches to the ad-supported service from the basic ad-free plan will have a “neutral to positive” effect on the company’s revenue, according to Peters.
This suggests that Netflix will receive at least $3 per month per user in ad revenue.
“We want to give consumers choice and determine what’s the best deal for them,” Peters said on the conference call.
The video resolution for Netflix’s ad tier will be 720p instead of 1080p, the quality of Netflix’s standard plan which costs $15.49 per month. The company’s basic plan without ads is $9.99 per month and also has 720p resolution.
The ad tier will initially be available in Canada and Mexico on November 1, followed by Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, United United and the United States on November 3. Spain will launch on November 10.
The price of streaming
$6.99 – basic with ads
$9.99 – basic without ads
$15.49 − standard without ads
$9.99 − with ads
$14.99 − ad-free
$7.99 − with ads
$14.99 − ad-free
$4.99 − with ads
$9.99 − ad-free
$4.99 – premium with ads
$9.99 − ad-free
$7.99 − with ads*
$10.99 − ad-free*
*Available from December
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