Netflix Announce Ad-Supported Subscription

Global streaming service Netflix have announced that they’re rolling out a new, ad-supported subscription to 12 countries in November of this year. 

Coined the Basics with Ads plan, it will cost just £4.99 a month - their lowest costing subscription yet compared to the next cheapest option at £6.99. This new direction of more affordable, ad-supported plans could be the start of a new era for streaming services and may be a change we see across the board in the coming years across other streaming services.

Due to increasing competition across the streaming world and subscribers cancelling their accounts due to the rising cost of living, Netflix has seen a dip in subscribers. The company lost more than 1 million subscribers in the first half of the year with their market value dropping by 65%, and further losses are predicted by the end of the next quarter.

Subscribers to the new plan can expect to see four to five minutes of adverts per hour during their streaming session. A small percentage of film and TV series will not be available on this plan due to licensing restrictions with third parties. Greg Peters, Netflix’s chief operating officer, said that only 5% - 10% of Netflix’s overall catalogue will be unavailable for viewers on the ad-supported plan.

With this new plan, Netflix hopes to bring more young viewers back to the streaming platform for good and they have hopes that existing subscribers may change to the lower-cost plan instead of leaving the platform completely:

“The launch could mean some of our existing members move off [more expensive] plans,” he said. “I definitely believe that a lower consumer-facing price with good incremental ad monetisation will enable us to grow membership and build a really significant incremental revenue and profit stream.”

On this project, Netflix is working closely with Microsoft to handle their ad-campaigns and the company has stated that it will not work with advertisers who promote smoking, weaponry, politics or “get rich-quick schemes”.

So who would be using this new Netflix Ads platform? Right now, we expect only giant global advertisers will be invited to advertise during the initial launch, but as the platform becomes more established, we expect smaller businesses could throw their hat in the ring to get that sweet brand ad in the middle of your favourite Netflix shows. If we had one ask though, it would be for more metrics! Luckily with Microsoft powering the ads tier, we hope this will become a reality.

It seems that this new plan could indeed help to bring back subscribers with the lower price, especially as the cost of living continues to climb. Other streaming companies, such as Disney+, plan to roll out their own ad-supported plan in December 2022. As marketers, we’re excited to see how ads on Netflix and Disney+ will develop once launched and potentially add to available channels for our clients to utilise in their marketing plans.

We continue to see newer ways to get our brands in front of users either on mobile, desktop or on their TVs. With the cost of digital advertising increasing YoY as the space gets more saturated, will these new additions free up space and therefore lower CPM? We think not, but having a larger choice of platforms will surely help get the mix right.

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