Netflix to launch new ad tier for £4.99 next month to win back subscribers
Netflix has confirmed that its new basic ad-supported offering will launch next month, setting more frugal Brits back £4.99 a month.
The new option will be an addition to existing plans, but will mean users who want to save a bit of cash will have to watch an average of four to five minutes of adverts per hour on shows like Squid Game and The Crown.
Ads will be 15 or 30 seconds long and targeted at audiences based on the country they’re tuning in from and the genre.
The streaming giant has already warned that some films and TV series won’t be available on the cheaper package due to licensing restrictions.
Netflix said this would vary by country, but roughly accounts for five to ten per cent of titles.
Users will also not be able to download titles if they opt for the cheaper package.
The offering will launch in 12 countries to begin next month, including the UK, Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain and the US.
The US firm first announced its push into advertising back in April, setting the scene for a rocky few quarters and an even rockier share price.
In the same month, Netflix revealed that subscribers were down 200,000, which tumbled by a further 970,000 in June earnings.
Netflix has lost roughly a third of its value since last October, with shares down over 36 per cent in the last six months alone.
However, Netflix’s Chief Operating Officer Greg Peters seems confident that this new ad package could be the answer for the streamer.
Peters told reporters that the‘Basic with Adverts‘ option was about taking a “pro-consumer approach” rather than to “steer people from one tier to another”.
He also said the company had modelled the ad offering to ensure that the lower price point did not chip away at revenue: the combined value of revenue from subscriptions plus advertising monetisation should be the same if not higher than the more expensive Netflix subscription.
“We’re confident that with Netflix starting at £4.99 a month, we now have a price and plan for every fan,”he said in a statement. “While it’s still very early days, we’re pleased with the interest from both consumers and the advertising community and couldn’t be more excited about what’s ahead.”
From an advertising perspective, the ‘basic’ option could be a game changer: a chance to tap into younger viewers who are increasingly shunning linear TV.
Recent data from TV agency Barb show that Netflix currently accounts for eight per cent of all TV viewing in the UK, making it larger than Channel 4, Channel 5, and Sky.
Netflix’s President of Worldwide Advertising Jeremi Gorman told reporters that Netflix had nearly sold all of its advertising inventory, but would not disclose specific price points.
She also confirmed that Netflix’s advertising partner Microsoft would not use viewer data to build profiles on any other service, meaning it will not be sold to third-parties.