Netflix’s ad tier is here.
The streaming company on Thursday unveiled the details of its big effort to jumpstart subscriber growth after the company’s first-quarter revelation that it had lost paying customers for the first time in a decade. Beginning on Nov. 3 in the United States, Netflix will offer a $6.99 advertising-supported subscription called “Basic with Ads,” where people opting for a lower-cost option will be shown four to five minutes of ads per hour of content they watch.
This tier will be available in 12 countries in November, including Australia, Brazil, Britain, Canada, France, Germany, Italy, Japan, Korea, Mexico and Spain.
The ads, ranging in length from 15 to 30 seconds, will play before and during television shows and films. For new films, the ads will only play before the movie begins. Older titles will see ads play both before and during the movie, similar to how they are shown on basic cable.
Subscribers opting for this less expensive tier will not be able to download titles for later viewing, a prohibition based primarily on technical challenges. The company also indicated that “a limited number of movies and TV shows,” somewhere between 5 and 10 percent of those on the service, won’t be available when the ad tier begins because of “licensing restrictions.”
During a presentation to journalists, Netflix’s chief operating officer, Greg Peters, said, “We believe that with this launch we’ll be able to provide a plan and a price for every Netflix fan.”
The advertising is being managed by Microsoft and Netflix is partnering with two verification companies to ensure that the ads are being seen as intended. The company also said Nielsen would be able to analyze audience reach and specific viewer demographics in the United States. Those partnerships will begin in 2023.
Jeremi Gorman, Netflix’s newly hired president of worldwide advertising, said that advertising on Netflix would allow companies a chance to “reach a diverse audience, including younger viewers who increasingly don’t watch linear TV.” In order to target ads to the proper audience, Netflix will collect information on gender and birth date from people opting for the cheaper option.
Netflix also hopes the new lower-priced offering will bring in new customers and perhaps encourage those who have been sharing passwords with friends and family, a user number the company believes could be as high as 100 million, to stop using others’ accounts and pay for their own.
“I think it’s a really relevant and complementary approach because obviously whatever we do with password sharing, having people be able to land in a lower price offering is a great way to give them a chance to find Netflix and pay for it consistent with that model,” Mr. Peters said.
The advertising strategy, first announced in April by Netflix’s co-chief executive Reed Hastings, marks a significant change for a company that swore off introducing ads for years, opting instead for “the simplicity of the subscriber model.” But Mr. Hastings, in making the initial announcement, said, “As much as I am a fan of that, I am a bigger fan of consumer choice. And allowing consumers who would like to have a lower price, and are advertising tolerant, to get what they want makes a lot of sense.”
Netflix isn’t the only streaming service to introduce ads after earlier swearing off the revenue model. Disney+ will introduce its advertising tier on Dec. 8, for $7.99 a month. The ad-free model, soon to be named Disney+ Premium, will cost consumers $10.99 a month, a 38 percent increase from the current price.
For existing Netflix customers, the programming will not change at all. Those looking for the cheaper tier will have to actively choose it. Mr. Peters said the company doesn’t intend to steer users to one tier over another: “We want to take a pro-consumer approach and let them land on the right plan for them. We think that the revenue model will be fine as a result.”
Source: | This article originally belongs to Nytimes.com
