Netflix is about to launch an ad-supported, lower-priced subscription plan aimed at attracting paying members who are willing to watch some ads in exchange for a lower monthly fee. With the introduction of advertising for the first time, Netflix is trying to strike a balance between appealing to price-conscious consumers and providing an enjoyable viewing experience.
Netflix plans to launch a low-cost ad-supported subscription plan in at least six markets around the world in the last quarter of this year, and a full rollout may not be until early next year. Details of the new service are emerging as Netflix draws up plans and talks with partners.
How Much is the New Netflix Ad Subscription Plan?
First of all, it has been confirmed that Microsoft has exclusively become Netflix’s global advertising technology and sales partner, and is negotiating cooperation with many advertisers and technology suppliers, while Netflix handles the details of cooperation with film and TV production companies.
Microsoft has little experience in streaming but has built a $10 billion advertising business over the past few years.
It is rumored that Netflix is considering pricing the new plan at $7-9 per month, which is about half the price of the $15.49 “standard” plan currently chosen by most members, and also slightly less than the $9.99 “Basic” plan.
Most households have cable service, and it is estimated that cable runs 10-20 minutes of commercials per hour of programming, and most streaming services actually offer fewer ads than cable.
Netflix plans to sell ads to advertisers about four minutes per hour, with ads running before or during the show, not after the show, according to people familiar with the matter.
Netflix will not use excessive ad targeting to present ad content to members, most members will see the same ads, and Netflix hopes that ads in the same regions will not be repeated over and over again.
In addition, Netflix executives have begun to decide which shows will have commercials and which will not, such as not showing commercials on children’s shows or on its own original movies.
The company wants to place ads on many of its own TV shows and is seeking partners to agree to run ads on its content, and studios like Sony Pictures Television, Universal, Warner Bros, Paramount, and others are happy to take part in Netflix’s ad profits. Advertising in old movies or TV shows.
Netflix has always seen itself as an alternative to cable services, allowing viewers to choose the movies or TV shows they want to watch without interspersed ads, and to cancel their subscription plans at any time.
However, Netflix suffered a loss of membership in the first half of the year, forcing company executives to finally accept the proposal to introduce advertising to attract price-conscious viewers who expect a streaming experience.
According to data from market research firm Ampere Analytics, by 2027, low-cost ad-included subscription plans are estimated to bring Netflix $8.5 billion in global revenue per year, including subscription fees and advertising sales.
Netflix has declined to comment on the details of its low-cost ad-supported subscription plan, and many partners, advertisers or investors still have questions.
Some questions for example;
- Netflix did not provide a forecast for how many people would sign up for the new program –
- how many people would see ads
- when it would start allowing third-party units to measure audience size.
Netflix has always protected its internal audience metrics from the public on the premise that Netflix has not sold ads in the past, but in the future advertisers are bound to ask Netflix to work with outside companies such as Nielsen to measure how many people will see ads.