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Netflix will launch its ad-supported tier in November, the report claims




Netflix’s upcoming ad-supported tier will launch sooner than expected, reports show.

According to insider sources, Netflix will launch the new tier on November 1 in several countries, including the UK, US, Canada, France and Germany.

While it’s still unclear how much the new ad-supported version will cost, it will be cheaper than the lowest ad-free tier (Basic), which costs £6.99 a month in the UK and $9.99 in the US.

Netflix had originally said it would launch ads in 2023, but that date has reportedly been pushed up due to declining subscriber numbers.

It also wants to introduce ads before streaming rival Disney+ releases its own ad-supported tier in the US on December 8.

Netflix had previously said it would launch an ad-supported tier in 2023, but has reportedly pushed that date forward due to declining subscriber numbers

WHAT WE KNOW ABOUT NETFLIX’S NEW AD-SUPPORTED TIER

In April 2022, Netflix said it would introduce ads for the first time.

According to reports, it will launch on November 1 in several countries, including the UK, US, Canada, France and Germany.

The tier will be cheaper than the cheapest existing tier (Basic; £6.99 per month). Unlike other ad-supported streaming services, it won’t be free.

Netflix is ​​working with Microsoft to develop ads for the new tier.

The code noticed in Netflix’s iPhone app by Steve Moser suggests that the ad level will also block the ability to download content.

Netflix co-CEO Ted Sarandos has also said that the new advertising team will not have access to the entire Netflix content library.

Netflix is ​​already known to have worked with Microsoft on its first subscription tier that has ads, but until now the release date has been unclear.

The Wall Street Journal and Variety both reported the news of the release date, with the latter attributing “industry sources who have been briefed on the streamer’s plans”.

Netflix will also reportedly charge brands “premium prices” to advertise on its platform, taking advantage of strong interest from advertisers to connect their products to Netflix’s broad audience.

Netflix charges advertisers roughly $65 (£56) to reach 1,000 viewers, which is significantly higher than most other streaming platforms.

Netflix declined to comment to MailOnline about the reports.

Since its inception 15 years ago, Netflix has refused to include advertising in any of its offerings, but that has changed starting this year.

In April, Netflix announced it would abandon its ad-resistance after revealing it had lost 200,000 subscribers globally in the first three months of the year.

At the time, Netflix CEO Reed Hastings revealed in an earnings call that the platform would introduce ads in “the next year or two.”

Then in May, Netflix told its employees that it would introduce ads sooner than expected — by the end of the year, The New York Times revealed.

“Yes, it’s fast and ambitious and it will require some trade-offs,” Netflix said in a memo to employees, seen by The New York Times.

Netflix added 8.3 million new subscribers in the fourth quarter of 2021. But in the following two quarters, it has lost subscribers, not gained them

Netflix added 8.3 million new subscribers in the fourth quarter of 2021. But in the following two quarters, it has lost subscribers, not gained them

Netflix's streaming rival Disney+ also introduces an ad-supported subscription tier for US customers on December 8, 2022

Netflix’s streaming rival Disney+ also introduces an ad-supported subscription tier for US customers on December 8, 2022

DISNEY+ INTRODUCES ADVERTISING TIMES

Disney+ will introduce an ad-supported subscription option in addition to the ad-free option, starting in the US on December 8, with plans to expand internationally in 2023.

The ad-supported offering is seen as a building block in the company’s path to reaching its long-term target of 230-260 million Disney+ subscribers by FY24.

In the US, Disney+ currently costs $7.99 per month, but this will be the price of the new ad-supported tier when it arrives.

Meanwhile, the existing ad-free Disney+ tier will increase $3 a month, from $7.99 to a hefty $10.99.

“Every major streaming company except Apple has or has announced an ad-supported service. With good reason, people want cheaper alternatives.’

In July, Netflix announced that it had lost nearly 1 million subscribers in the second quarter of the year – almost five times the amount lost in the first quarter.

In a letter to shareholders at the time, Netflix said it would launch a new subscription tier with ads in early 2023, starting with “the handful of markets where ad spending is significant”.

This was even though it had reportedly told its employees that ads would arrive by the end of 2022.

The Los Gatos, California streaming firm has not announced how much the new ad-supported version will cost, although it will be cheaper than the lowest ad-free tier (Basic), which costs £6.99 a month.

But it won’t be free, meaning customers will have to put up with ads in addition to paying a monthly subscription price.

Also, the new ad team will not have access to Netflix’s entire content library, co-CEO Ted Sarandos revealed in July.

“Today we can include the vast majority of what people watch on Netflix in the ad-supported tier,” Sarandos said at the time.

“There are some things that don’t – which we’re talking to the studios about – but if we launched the product today, the members of the ad team would have a great experience.

“We will remove some additional content, but certainly not all of it, but we don’t think it’s a significant holdback for the business.”

Netflix co-CEO Ted Sarandos (pictured) revealed in July that the new advertising team will not have access to the entire Netflix content library

Netflix co-CEO Ted Sarandos (pictured) revealed in July that the new advertising team will not have access to the entire Netflix content library

NETFLIX UK PRICES

Basic: £6.99 (one screen at a time)

Standard: £10.99 (two screens at a time, HD available)

Premium: £15.99 (four screens at a time, Ultra HD available)

More info: Netflix.com

BBC-produced content may be excluded from the tier, because the BBC is not allowed to have advertising supporting its programs due to the license fee.

Last month, code spotted in Netflix’s iPhone app by Steve Moser suggests that the ad level will also block the ability to download content.

“Downloads available on all plans except Netflix with ads,” according to the in-app text, which Moser shared with Bloomberg.

The code also suggests that users won’t be able to skip ads, and playback controls won’t be available during ad breaks, Moser added.

If the November 1st launch date is correct, more details about the ad tier will likely be officially revealed in the coming weeks, such as pricing and exactly when ads will start playing during the user experience.

Ads may only appear when the content starts and ends, or they may play at various intervals throughout the duration of the movie or TV series.

Netflix users who subscribe to the Basic, Standard, or Premium tiers won’t see any ads, though it’s likely these tiers will see more price increases in the near future.

Netflix’s streaming rival Disney+ is also releasing its own ad-supported subscription tier for US viewers on December 8 and for viewers in other markets next year.

In the US, Disney+ currently costs $7.99 per month, but this will be the price of the new ad-supported tier when it arrives.

Meanwhile, the existing ad-free Disney+ tier will increase $3 a month, from $7.99 to a hefty $10.99.

As Disney+ is £7.99 a month in the UK, it is assumed that the price in the UK will increase by £3 a month in the same way when the new ad tier arrives.

Disney+ has a number of hugely popular and extensive content libraries, including Star Wars, Marvel and Disney movies, as well as The Simpsons and some exclusive series, including the eight-hour Beatles documentary.

NETFLIX PROMOTES PLANS TO INTRODUCE ADVERTISING FOR THE FIRST TIME

In April 2022, Netflix CEO Reed Hastings revealed in an earnings call that the platform would introduce ads in “the next year or two”.

At the time, Netflix had just revealed that it lost 200,000 subscribers in the first three months of the year, and expected to lose 2 million more in the second quarter.

The stock price fell significantly following the news, wiping roughly $70 billion off the company’s market value.

Then in May, Netflix told its employees that it would introduce ads sooner than expected — by the end of the year, The New York Times revealed.

“Yes, it’s fast and ambitious and it will require some trade-offs,” Netflix said in a memo to employees, seen by The New York Times.

“Every major streaming company except Apple has or has announced an ad-supported service. With good reason, people want cheaper alternatives.’

Company executives pointed out that HBO and Hulu have been able to “maintain strong brands while offering an ad-supported service”.

The news prompted a furious backlash from some users, who threatened to cancel their subscriptions if they had to endure ads.

Twitter user @UCantCensorThis posted: ‘Hey @netflix. I’m telling you now, if I EVER see a single ad interrupting anything I’m watching on your service, I will cancel faster than you can say “commercial break”.

A survey of 2,922 UK consumers by mobile advertising platform LoopMe found that more than a third (36 per cent) of UK consumers would cancel their Netflix subscription if it was ad-supported.

However, 34 percent said they would continue to subscribe if it meant they could pay a cheaper price with ads.

Paolo Pescatore, an analyst at PP Foresight, suggested that to attract users to sign up and keep them engaged, the new ad-supported plan would need to be “somewhere between 25%-50% less than what they pay today”.

Jem Lloyd-Williams, managing director of media agency Mindshare UK, said that for some, the trade-off between saving money each month and watching advertising could prove attractive.

“As long as Netflix continues to invest in high-quality content, we believe this could be the right move at the right time for the streaming giant,” he said.



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