Netflix’s ad tier is here.
The streaming company Thursday unveiled the details of its effort to jump-start subscriber growth after the company’s first-quarter revelation that it had lost paying customers for the first time in a decade. Beginning Nov. 3 in the United States, Netflix will offer a $6.99 advertising-supported subscription called “Basic with Ads,” in which people opting for a lower-cost option will be shown four to five minutes of ads per hour of content they watch.
This tier will be available in 12 countries in November, including Australia, Brazil, Britain, Canada, France, Germany, Italy, Japan, South Korea, Mexico and Spain.
The ads, ranging in length from 15 to 30 seconds, will play before and during television shows and films. For new films, the ads will only play before the movie begins. Older titles will see ads play before and during the movie, similar to how they are shown on basic cable.
Subscribers opting for this less expensive tier will not be able to download titles for later viewing, a prohibition based primarily on technical challenges. The company also indicated that “a limited number of movies and TV shows,” between 5% and 10% of those on the service, won’t be available when the ad tier begins because of “licensing restrictions.”
The advertising is being managed by Microsoft, and Netflix is partnering with two verification companies to ensure that the ads are being seen as intended. The company also said Nielsen would be able to analyze audience reach and specific viewer demographics in the United States. Those partnerships will begin in 2023.
Jeremi Gorman, Netflix’s newly hired president of worldwide advertising, said that advertising on Netflix would allow companies a chance to “reach a diverse audience, including younger viewers who increasingly don’t watch linear TV.”
Netflix hopes the lower-priced offering will bring in new customers and perhaps encourage those who have been sharing passwords with friends and family, a user number the company believes could be as high as 100 million, to stop using others’ accounts and pay for their own.
For existing Netflix customers, the programming will not change at all. Those looking for the cheaper tier will have to actively choose it.