The introduction of a new ad-supported tier for Netflix will land this year, despite investors being told it was a 2023 ambition, according to Variety (opens in new tab).
Sources have told the site that November 1 is the new target — a date backed up by a separate report in the Wall Street Journal (opens in new tab).
The sooner-than-expected date is said to be in part down to a desire to get its lower-cost offering in ahead of Disney Plus’ ad-supported tier, which arrives on December 8.
It won’t be a soft launch either, the report claims, with multiple countries including big markets like the US, Canada, the UK, France and Germany in the mix for day-one access.
Netflix, for its part, declined to confirm the new schedule. “We are still in the early days of deciding how to launch a lower-priced, ad-supported tier and no decisions have been made,” the company said when approached by Variety.
That seems like a non-denial — which in itself is curious, given the company specifically told investors that the tier would launch “around the early part of 2023” back in July.
The new tier, which is expected to cost around $7 to $9 per month compared to the current lowest price of $9.99, has gone from being an idea Netflix didn’t seem terribly interested in, to the officially adopted strategy in a remarkably short space of time.
Just 177 days ago, the company’s CFO Spencer Neumann told an investor conference that it simply wasn’t “something in our plan right now.” Just over a month later, and Netflix CEO Reed Hastings told investors that the company was “quite open” to accounts subsidized by ads, and the plan was officially confirmed in June with a 2023 target.
So what has caused this sudden about-face? Well, it hardly seems a coincidence that between the initial denial and subsequent announcement, Netflix recorded its first drop in subscribers in over a decade. And while the company had reasonable extenuating circumstances — Russia’s invasion of Ukraine meant Netflix cancelled 700,000 Russian subscriptions overnight — the urgent need for growth meant that some kind of drastic action was required.
Netflix certainly seems ambitious in how much money it intends to make from advertisers. The Variety report claims that the company is looking for for CRM rates of $65 — considerably higher than the industry standard of $20.
The company also wants a minimum commitment of $10 million in annual spend from would-be ad buyers, which would certainly help sure up investors’ nerves if achieved.
But the jury is still out on whether an ad-supported Netflix is something customers are willing to pay for. While the anticipated four minutes of ads for every hour of content is far more appealing than the ad-saturated world of cable TV, the anticipated $1 to $3 monthly saving may not be enough to tempt current subscribers away. We should find out one way or another in just a few months.
Next: These are the 5 Netflix movies to watch before they leave in September and you can also check out Elvis, that is my favorite movie of the year — and it’s now available on streaming.