A new report from Bloomberg shares details regarding Netflix’s upcoming ad-supported tier. According to Comicbook, Bloomberg has discovered the cheaper subscription plan set to launch later this year will cost around $7-9 a month. For most of Netflix’s current users, this is cheaper than the popular “Standard” plan of $15.49 a month.
Earlier this year, Netflix’s CEO Reed Hastings announced the streamer’s strategy to incorporate a version with ads after years of avoiding them.
“Those who have followed Netflix know that I have been against the complexity of advertising, and a big fan of the simplicity of subscription,” Hastings previously stated via Comicbook. “But as much as I am a fan of that, I am 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. It is pretty clear that it is working for Hulu. Disney is doing it, HBO did it. We don’t have any doubt that it works,”
An ad-supported version has become the norm with HBO Max introducing an ad-supported tier for $9.99 last year. And Disney+ announced their plans for similar ad plan to debut later this year. Unlike Netflix, Disney will seek to increase the rates for their other plans in anticipation of the cheaper version being available. However, Netflix issued a price hike for their other plans earlier this year.
Comicbook relayed via Bloomberg’s findings how Netflix plans to incorporate the adverts into their programming. Similar to Hulu’s select on-demand offerings, Netflix will begin timidly with 4 minutes of ads per hour. They will most likely be shown before and during a program. As of now original films and children’s programming will remain free from ads. When it comes to content from other studios, Netflix currently sees no issue with negotiating terms for older content. Details for new material will have to be explored once that ship sails.
The Bloomberg report states that the streamer hopes to reach a total of $8.5M in revenue globally by 2027 from the combined profit of subscribers and ad placements. In addition to this change, Netflix is also experimenting with charging users for sharing subscriptions outside of their households.