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Netflix to launch cheaper ad-supported subscription tier in November

Netflix will reportedly launch a cheaper ad-supported tier for its streaming platform at the start of November as the company tries to stem the loss of more than 1 million subscribers in 2022.

The company was initially planning to start offering the service in 2023, but Variety reported last week it had been bumped to 1 November in order to get ahead of Disney+’s planned launch of an ad-supported tier in December.

According to reports, Netflix’s service will launch in the US, France, Germany, Australia and Canada among other places, and is expected to be priced between US$7 and $9. The most basic Netflix subscription now costs US$9.99 or $15.49 for a standard subscription.

The ad tier would be additional to the existing tiers, meaning current subscribers would not see any ads on Netflix.

A spokesperson for Netflix said the company had not made any decisions yet.

“We are still in the early days of deciding how to launch a lower priced, ad-supported option and no decisions have been made,” they said. “So this is all just speculation at this point.”

In July, Netflix reported a loss of 1 million subscribers for the second quarter of 2022, its second quarter of loss of subscribers, with shares falling 67% to the end of July.

On the investor call in July, the company’s chief operations and product officer, Greg Peters, revealed the company’s thinking behind introducing advertising to support lower-fee subscriptions.

He said Netflix wants to “provide an incredible experience for consumers … who choose to take the ad-supported offering, but also provide an incredible experience for brands and advertisers who want to work with us to make sure that we’re doing a good job of elevating what that looks like for them”.

He said he was optimistic that advertising on Netflix can “deliver an experience which is fundamentally different from the ad experience” on broadcast or cable television today.

The launch would focus on countries where there were “more mature ad markets,” Peters said at the time.

Netflix announced in July it would partner with Microsoft for the ad technology and as a sales partner globally. The Variety report suggested the two companies are seeking US$65 cost for a thousand views, seeking a minimum US$10m annual ad spend commitment from companies now, and touting the company can get 500,000 subscribers on the ad-supported tier by the end of 2022.

Peters told investors in July there had been “a lot of excitement” in early discussions with advertising agencies.

“I think for them … they’ve wanted to connect with the titles, incredible content that [Netflix chief executive, Ted Sandros’s] team was putting out there,” he said. “And I think we also share a perspective on what is a great experience for consumers and for advertisers.

“So when you think about the kind of advertising we see, frequency caps, what’s a great ad experience, we’re noticing a high degree of alignment there.

“So that enthusiasm, that alignment is increasing sort of my optimism and the excitement that I’ve got to basically get this out there because I think it’s going to be a win-win-win for all parties involved.”

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