Back in April, Netflix announced that it would be adding advertisements to its paid subscriptions. They have more recently announced the specificities. Let’s dive in.
Basic with Ads will launch November 3rd in the U.S, cost $6.99 a month and be available in a dozen countries, including Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain and the U.K. Netflix will roll out the offering over the course of 10 days, starting with Canada and Mexico on November 1st and finishing with Spain on November 10th.
The streamer’s ad-supported tier will debut at $6.99 per month, alongside Netflix’s current basic option ($9.99/month), standard ($15.49/month) and premium ($19.99/month) plans.
Despite backlash, Netflix has announced this as a move that will diversify and broaden their audience. “We at Netflix have a huge opportunity ahead to grow our viewing and to attract more subscribers, and part of that is having a wide range of price and plan options for different viewer needs,” Greg Peters, Netflix’s COO and chief product officer, said during a press call Thursday.
In regards to how the advertisements themselves will work, ads will be divided into 30- and 15-second spots, and average 4 to 5 minutes, the same ad load that will be featured on Disney+’s upcoming ad-supported offering. The ad spots will be placed pre and mid show.
Like Netflix’s current basic tier, Basic with Ads will only be available on one screen at a time. Both Netflix’s basic tier ($9.99 per month) and the upcoming ad-supported tier will now have HD video quality. Prices for Netflix’s other plans will not change, though Netflix did implement a price hike in January for the first time since 2020.
Due to licensing restrictions, some content will be missed on the ad tier option. The missing content varies from country to country based on licensing deals, but Peters said it’s a “very small minority of viewing,” around 5% to 10% of content.
Another holdback is that subscribers won’t be able to download titles to devices, which Peters attributed to “technical complexities” that the company did not want to hold its general release for. So don’t count on it for your long journey choice of watchable content.
In August, Netflix hired Snap‘s chief business officer Jeremi Gorman as president of worldwide advertising and Snap’s vp of sales, Americas, Peter Naylor, who will serve as VP of advertising sales. At launch, Netflix will have “hundreds of advertisers” worldwide, Gorman said during the press call, and there’s very little inventory left.
“We’ve nearly sold out all of our inventory for launch,” said Gorman. “We’ve built our ads products to ensure that advertisers have an incredible experience as to our members.”The strongest categories include auto, CPG, travel, retail and luxury brands.
Netflix is also banning certain categories, including political or policy ads and ads that are for illegal products. “Guns, explosives, weapons, fireworks, these kinds of things as well as smoking-related ads, or anything else that kind of feels like a get-rich-quick scheme,” said Gorman. “They’re all prohibited categories to ensure that our members are seeing the highest quality ads that provide the best services to them and resonate with their viewing experience.”
Netflix will collect the date of birth and gender of subscribers at sign-up, and use that data to help the company show more relevant ads over time.
“We think this is a big win for advertisers and a big win for our members,” said Gorman. “If people are going to choose and that they want to be an ad-supported tier, it’s important that we show ads that are relevant to them, that resonate with them.”
The company lost nearly one million subscribers last quarter. In the first quarter of 2022, Netflix lost subscribers globally for the first time since October 2011 and missed its projected target of 2.5 million net adds. As to whether introducing a basic ad subscription will change much, we can’t say for sure. However, this quarter, Netflix had four of its biggest films of all time, and three of its biggest series ever, including Stranger Things 4, Ryan Murphy’s Dahmer series and Korean show Extraordinary Attorney Woo.