Netflix officially launched its lower priced ad-supported plan in the United States, UK, Australia, Japan, Brazil, France, Germany, Italy, South Korea, Canada, and Mexico, with Spain following on November 10. The Basic with Ads plan costs US$6.99 a month in the United States, with prices varying by region.
The streamer’s current plans and members were not be impacted with the launch of Basic with Ads, which complements Netflix’s existing Basic, Standard and Premium plans. Basic with Ads offers all the features of the Basic plan, with a few differences: video quality is up to 720p/HD, it has an average of four to five minutes of ads per hour, a limited number of movies and TV shows are not available due to licensing restrictions, and users do not have the 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. Basic with Ads also represents an exciting opportunity for advertisers — the chance to reach a diverse audience, including younger viewers who increasingly do not watch linear TV, in a premium environment with a seamless, high-resolution ads experience,” the company said in a statement weeks ago.
At launch, ads will be 15 or 30 seconds in length, which will play before and during shows and films. To help advertisers reach the right audience — and ensure ads are more relevant for consumers — Netflix is offering broad targeting capabilities by country and genre (e.g. action, drama, romance, sci-fi). Advertisers are also able to prevent their ads from appearing on content that might be inconsistent with their brand (e.g. sex, nudity or graphic violence).
“We could not have done this without our advertising partner, Microsoft, and the many advertisers from around the world who have chosen to show their ads on our service. While there are no official launch partners nor category exclusivity, Tiffany & Co.’s ad featuring Beyoncé was the first ad to ever run on the service in Canada on November 1, and members in 12 countries can expect to see ads from several of the world’s most recognized brands, such as GM, L'Oreal, McDonald's, LVMH, Subway, Target, Heinz, and Carnival Cruises,” Netflix declared in a more recent statement.
● REACHING A NEW TARGET
Becoming more competitive is imperative for Netflix, which needs to prove that its strong Q3 subscriber results herald the reversal of misfortunes after the company lost subscribers globally for the first time in over a decade during the first quarter of the year, Morning Consult assured in its latest report.
The ad-supported tier will likely monetize a new segment of consumers for Netflix. In fact, new research from Morning Consult shows price, rather than a perceived lack of content selections, was by far cited most often as a major reason for not paying for any video streaming subscriptions. Therefore, it stands to reason that there are currently consumers who do not pay for any subscriptions such as Netflix – the lowest tier of which currently costs US$9.99/month in the United States – but would be open to doing so for a lower fee.
In addition to helping Netflix reach new consumers, the ad-supported tier will also help the streaming giant retain customers who might have otherwise canceled. Those impacted by Netflix’s imminent crackdown on password sharing will soon have a relatively inexpensive way to retain access with the company’s upcoming ad tier.
Moreover, interest in ad-supported streaming will help services retain younger subscribers. Morning Consult data shows that younger cohorts are more likely than their older counterparts to say they have already switched over to a service’s lower-cost ad-supported plan in the last 12 months, which makes sense given their higher price sensitivities.