Netflix is tipped to launch its ad-based model in November, ahead of its original schedule for some time in 2023.
In an effort to attract subscribers in an increasingly competitive streaming market, the ad-supported Netflix platform will be significantly cheaper than the company’s standard plan.
Netflix will first launch the ad-based model in a handful of countries – including Australia – before expanding the rollout internationally in 2023.
Netflix is reportedly aiming to beat a key competitor, with Disney+ set to launch a similar model in December.
What to expect
How will an ad-supported subscription change the Netflix experience?
Industry publication Variety reported that users will see about four minutes of mid-roll advertising per hour embedded in series.
For movies, Netflix is expected to run pre-roll ads before the start of the feature.
Netflix will also reportedly reject political, gambling and cryptocurrency advertising, and will not market any products to children.
The streamer is said to still be considering restrictions on pharmaceutical advertising.
As well as types of ads, Netflix will set ‘frequency caps’ to restrict how often an advertising ‘spot’ can be served to individual viewers.
It is believed that individual ad spots will be delivered at a rate of one per hour and three per day, per viewer – which is relatively low by industry standards.
Potential advertisers may be deterred by the company’s limited targeting abilities.
Although social media platforms like Twitter and Facebook offer user-specific advertising based on factors like location, gender, age and interests, Netflix will only filter advertising based on which country the user is based.
Search for advertisers
Netflix recruited Microsoft in July to launch the streaming service’s new advertising model.
The pair have reportedly begun searching for local advertisers in each international market, seeking a soft $65 ($95) CPM (cost per thousand views) for prospective partners.
It hopes to have advertisers locked in for countries including Australia, the United States, Canada, Britain, France and Germany by September 30, ahead of the November launch.
As for the intricacies of the launch, a Netflix spokesperson told The Sydney Morning Herald that it was ironing out the finer details.
“We are still in the early days of deciding how to launch a lower-priced, ad-supported option and no decisions have been made. This is all just speculation at this point,’’ the spokesperson said.
Making up for lost subscribers
Netflix last month recorded its first-ever drop in subscribers, losing nearly one million subscribers in the second quarter.
It had anticipated a more disastrous quarter, initially forecasting a loss of two million subscribers.
Netflix hopes a cheaper platform will lure back subscribers, with the new ad-based model reported to cost as little as half the price of the current basic plan, which is $10.99.
Netflix co-founder and co-CEO Reed Hastings said in April the model would be a good option for ‘‘advertising-tolerant’’ users.
“Those who have been following Netflix know that I have been against the complexity of advertising and a fan of the simplicity of subscription,” Mr Hastings said.
“But I’m a bigger fan of consumer choice – and allowing consumers who would like to have a lower price and are advertising-tolerant get what they want makes a lot of sense.”
In a bid to boost revenue, Netflix also announced it would be cracking down on password sharing.
Users that share their passwords with different households will be slapped with an ‘extra home’ fee of $US2.99 ($4.40).
Racing ahead
The rumoured November launch date places Netflix one month ahead of rival Disney+.
Disney announced in March it would introduce an ad-supported tier for US users in late-2022, with a December 8 launch date since locked in.
The platform will roll out the model internationally in 2023.
Disney+ has been steadily encroaching on Netflix’s subscriber base since Disney begun migrating its content to the platform in November 2019.
Netflix still boasts more individual subscribers, but Disney+ overtook Netflix in the number of subscriptions in August, holding 221 million over Netflix’s 220.7 million.
