Netflix will introduce an advertising-supported plan on Nov. 3. Here's why Netflix is offering this new plan, and what it means for the company's future
The price gives Netflix a competitive product against similar offerings from newer rivals. It’s $3 a month lower than the price of the ad-backed version of HBO Max, from Warner Bros. Discovery Inc., and $1 less than the forthcoming Disney+ with commercials. The company’sad-free packages range from $10 a month for a plan that lets users watch on one screen at a time to $20 a month for a high-definition service with up to four screens going at once.
Shares of Netflix rose as much as 4.4% to $230.51 in New York after the announcement. They are down 62% this year and headed toward their first annual decline since 2014 after peaking above $700. “They are pricing aggressively,” Bloomberg Intelligence analyst Geetha Ranganathan said on Bloomberg TV. The new tier will “open up the product to a whole new set of subscribers.”
Netflix is starting with a familiar approach to advertising and plans to adjust its offering over time. Ads will be 15 to 30 seconds long and will play before and during TV shows and films, the company said. It plans to use its data on viewers to let sponsors target their audiences based on genre and help them prevent kids from seeing unsuitable content.
A key issue for advertisers will be audience metrics — the data that traditional TV networks use to price their spots. Netflix has partnerships with DoubleVerify and Integral Ad Science to confirm the viewability and traffic validity of ads starting in the first quarter of 2023. Nielsen, the ratings standard bearers, will provide data in the US sometime that year as well.“We’re confident that with Netflix starting at $6.
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