Netflix's More Affordable Ad-Supported Tier Could Launch Sooner Than Expected

While Netflix announced to the world in July that it is launching its ad-supported version in early 2023, the streamer may alter its plans.
Netflix's More Affordable Ad-Supported Tier Could Launch Sooner Than Expected

While Netflix announced to the world in July that it is launching its ad-supported version in early 2023, the streamer may alter its plans. According to a report from The Wall Street Journal on Wednesday, Netflix executives informed ad buyers that the launch date had been moved to November 1, 2022. If this pans out, Netflix could start its lower-priced ad tier one month ahead of the competition at Disney+.

Faced with profit-making concerns amid fierce competition in the streaming world, Netflix and Disney+ are engaged in a cat-and-mouse game to release a cheaper advertisement-supported plan. According to sources with Variety, Netflix will roll out in several countries around the world, including the United States, the UK, Canada, France, and Germany. Disney+ will begin in the United States in 2022 and shift to international territories a year later.

"We are still in the early days of deciding how to launch a lower-priced, ad-supported tier, and no decisions have been made. So this is all just speculation at this point," a Netflix spokesperson told us.

The WSJ has learned from sources that the streaming service intends to charge its advertisers a fee of around $65 for every 1,000 views. According to sources, Netflix only allows brands to commit to $20 million per annum to ensure subscribers do not witness the same advertisement too frequently.

The hefty CPM (cost per thousand) price points to the company's high expectations for the incoming ad-supported platform and that it is confident buyers will have a strong enough interest to cough up the cash. Ad buyers mentioned that it is typical for newcomers in the advertising space to pursue high prices and then settle for lower later on.

In comparison, Disney+ is asking around $50 to $60 CPM, the Journal said earlier.

In terms of ad load, buyers claim that Netflix's ad-supported level will have an ad load of around about four minutes per hour for TV shows. For movies, the streaming giant will run pre-roll ads, according to Variety.

According to Bloomberg, which reported earlier this month that Netflix would indeed keep its kids' programming commercial-free, there has been speculation that original movies will remain ad-free as well.

That's very much in line with Disney+, which TechCrunch says confirmed in May that it will have a light ad load on par with four minutes of ads an hour. The family-friendly streamer will have zero commercials for preschool programming.

While we don't know how much Netflix's ad tier will be, the rumored cost is anywhere from $7 to $9 per month. Rival Disney confirmed in its recent earnings call that its flagship streaming service Disney+ would charge subscribers $7.99 per month.

Reports have recently emerged declaring that Netflix won't allow offline viewing in its ad plan. Not much of Netflix's plans are confirmed, so anything may change as the company builds out the ad-supported plan.

That said, the 25-year-old streaming service has made a few confirmed moves, including partnering with Microsoft to help launch the ad tier. Netflix also confirmed during its July earnings call that the ad-supported plan wouldn't have its entire content catalog when it first launches due to licensing deals, so advertisers won't get to buy ads for certain titles — at least initially.

The company recently also appointed two Snap Inc. executives, Jeremi Gorman and Peter Naylor, to lead its advertising business.

 

Blog
|
2024-11-25 19:09:07