The time has come. This morning, Netflix hosted a press conference to unveil a sneak peek of its new ad-supported plan, “Basic with Ads,” which will go live on November 3 across nine countries comprising that of the U.S., and cost $6.99 per month, which is $13 lower than the Premium subscription. It’s in line according to reports. The new plan’s price will be between $7 and $9.
Additionally, Nielsen will be Netflix’s customer measurement partner. This is not expected, considering Nielsen has been accused of providing inaccurate streaming data.
The lower plan will be available across 12 markets from the beginning. Beginning on November 1, Canada and Mexico subscribers will be the first to test the new service. The plan will be rolled out across the U.S., the U.K., France, Germany, Italy, Australia, Japan, Korea, and Brazil on November 3. Spain is the final country to enjoy the lower-cost pricing when it is launched on November 10.
The launch dates confirm that the ad tier will be available in 2022, a change from Netflix’s earlier announcement that it would be launched in early 2023. Netflix will be ahead of the competition Disney+ by one month as it launches its ad-supported plan for $7.99 per month starting on December 8 in conjunction with a hike in price for its Ad-Free plan.
Netflix ad plan price, availability
The new plan has three distinct features compared to the usual Netflix user experience (the Standard program). The program will show 15 or 30-second advertisements before or during movies and shows, “a limited number of movies and TV shows won’t be available due to licensing restrictions,” and downloading offline for offline play isn’t possible. The ads will be shown in an “average of 4 to 5 minutes of ads per hour,” that’s superior to television on cable, but it’s not the best.
It’s unclear what its popularity of it will be. Essential With Ads plans will become among customers, particularly considering that it’s just $3 more than the Basic plan. It could be an upsell strategy more than anything else, and the price is lower. $6.99 cost leads to more sign-ups, and when users get tired of the ads, they may be more inclined to switch to a more costly plan rather than dropping the project altogether.
How will the ad-supported Netflix plan be implemented?
In the blog entry, Netflix stated that, at the time of launch, advertisements will run between 15 and 30 seconds long and will be played before or during a film or show. On average, customers will receive between 4 and five minutes of advertisements per hour. Ads will be accessible across Netflix’s Netflix catalog. However, only a few films and TV shows won’t be able to display ads due to licensing limitations.
The plan will feature high-quality 720p video. However, users won’t be capable of downloading anything when they choose the ‘essential without ads’ Netflix plan. In the current plans, there is nothing new for Netflix customers. The new ad-based program is expected to be available next month, and it’s unclear when it will go live for Indian customers. Currently, Netflix has three plans: Standard, Basic, and Premium.
The decision to implement advertising, which analysts have long believed Netflix ought to have looked into before now, is a result of Netflix’s restless experimentation with pricing across several markets like India, Indonesia, and Kenya in recent times to increase the market reach of its services.
This month, Netflix launched the most budget-friendly monthly price that it has ever offered in India, which allows users to sign up to Netflix for as little as just Rs199 ($2.6). The company also launched an unlimited mobile plan in Kenya. The company claims to be “seeing nice growth” in several markets, including India.
On Tuesday, Netflix reported the first loss of subscribers in more than a decade. It also predicted losing another 2 million global subscribers during the current quarter. Netflix’s shares dropped by as much as 27% to $256 during extended trading.
The company’s revenue grew by 10 percent last year to $7.8 billion but fell below Wall Street expectations of $7.9 billion. It acknowledged revenue growth “slowed considerably.”
“Our relatively high household penetration — when including the large number of households sharing accounts — combined with competition, is creating revenue growth headwinds,” it stated on Tuesday.
It blamed a range of factors that led to the drop in subscribers. It claimed that the decrease indicates the onset of saturation in its key markets. The company also acknowledged the growing competition from rivals like Disney, Paramount, and Warner Bros. The company also stated that over 100 million customers use Netflix by borrowing credentials from other companies.
In its earnings call, the company claimed that the large user base that doesn’t have to pay is an extraordinary group to persuade subscribers or make their friends and relatives able to spend more.
Prices are lower than Disney’s.
Netflix’s $6.99 per month cost is lower than ads-supported Disney+ and Hulu, which will be $7.99 per month once Disney+’s ad-supported tier is launched in December. HBO Max with ads is $9.99 per month.
Netflix offered the service at a price to ensure that anyone who chooses to switch to an ad-supported service from the basic ad-free plan will see a “neutral to positive” effect on the company’s revenues, as per Peters.
This means Netflix is likely to earn $3 per month for each user in advertising revenues.
“We want to offer consumers choice and figure out the best offering for them,” Peters declared during his conference call.
The video resolution for Netflix’s advertisement level will be 720p, not 1080p, which is the resolution of Netflix’s standard plan, which costs $15.49 each month. Netflix’s basic plan with no advertising costs $9.99 monthly and includes 720p resolution.