On a global conference call at the end of last week, Netflix’s chief operating officer and chief product officer Greg Peters confirmed the start of a new Netflix subscriber tier was just weeks away.
That new tier comes with ads in return for a lower monthly fee. The streaming platform hopes the return will be two-fold – increased revenue from ad income and increased revenue by appealing to potential customers who stayed away because of cost.
Netflix with ads
• Cost in Australia $6.99
• Launch date November 4
• Frequency: 4-5 ads per hour
• Content downloads: Not available for Basic with Ads subscribers
• Ad format: At launch, ads will be 15 or 30 seconds in length and will play before and during shows and movies.
Netflix indicated L’Oreal could soon be advertising on the platform
Peter said: “We’re excited to launch Basic with Ads – Netflix’s lower priced ad-supported plan – in November.
“Unmissable entertainment at unbeatable value: Basic with Ads will cost just $6.99 per month in Australia and will launch on 4 November.”
Peters noted the new tier will initially be available in 12 countries: Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, the UK and the US.
Netflix said it will then have a plan for every fan: “Our current plans and members will not be impacted. Basic with Ads complements our existing ad-free Basic, Standard and Premium plans.”
Continuing to outline the strategy, Peters continued: “Basic with Ads offers all the features people expect from Netflix’s Basic plan, with a few differences.
“What stays the same: A wide variety of great TV shows and movies; personalised viewing experience; a wide range of TV and mobile devices; change or cancel your plan at any time.
“What’s different: Video quality up to 720p/HD (now for both our Basic with Ads and Basic plans); average of 4 to 5 minutes of ads per hour; a limited number of movies and TV shows won’t be available due to licensing restrictions, which we’re working on; no ability to download titles.
“In short, Basic with Ads is everything people love about Netflix at a lower price, with a few ads in between. Starting in November, signing up will be easy – visit Netflix.com and register with your email, date of birth and gender to get started.”
Greg Peters
Netflix pitch to advertisers
Peters: “Basic with Ads represents an exciting opportunity for advertisers – the chance to reach a diverse audience, including younger viewers who increasingly don’t watch linear TV, in a premium environment with a seamless, high-resolution ad experience.
“To help advertisers reach the right audience and ensure our ads are more relevant for consumers, we’ll offer broad targeting capabilities by country and genre (e.g. action, drama, romance, sci-fi). Advertisers will also be able to prevent their ads from appearing on content that might be inconsistent with their brand (e.g. sex, nudity or graphic violence).”
Regarding verification tools, Peters explained: “We have partnerships with DoubleVerify and Integral Ad Science to verify the viewability and traffic validity of our ads starting in Q1 2023.”
Netflix and audience measurement
Last week Mediaweek reported Netflix had signed up to BARB’s measurement of what people across the UK are watching. BARB is the first industry-owned audience currency in the world that Netflix has joined.
It is expected that Netflix could look to strike a similar deal in Australia with FTA-owned TV audience measurement service OzTAM. As OzTAM scans all content in homes on the TV panel it knows the number of hours that people watch various platforms.
OzTAM told Mediaweek: “While VOZ is technically capable of reporting content-level viewing to SVOD and non-broadcast AVOD services, and OzTAM is building out the capture capabilities that would enable that, reporting SVOD is outside the current VOZ service specifications. OzTAM does have the technology in approximately one-third of panel homes to estimate platform-level viewing, e.g. as seen in the ThinkTV 1H 2022 TV fact pack.
The Netflix Basic with Ads tier will launch just six months after founder and CEO Reed Hastings first announced the option of a lower priced ads plan.
Peters added: “None of this would have been possible without our team’s hard work or Microsoft’s extraordinary partnership. The switch from linear is happening at an ever increasing speed, with streaming now surpassing free-to-air and pay TV in the US. We’re confident that with Netflix starting at $6.99 per month, we now have a price and plan for every fan. 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. As we learn from and improve the experience, we expect to launch in more countries over time.”