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 * Netflix Will Launch $7 Plan With Ads


NETFLIX WILL LAUNCH $7 PLAN WITH ADS

By Lucas Shaw / Bloomberg
October 13, 2022 2:46 PM EDT

Netflix Inc. will introduce an advertising-supported plan on Nov. 3, charging $7
a month for a subscription that the company bets will entice new
budget-conscious customers and jumpstart growth.

The lower-priced streaming package will debut in the US and 11 other countries,
including Japan, France and Brazil, Netflix said Thursday. It will include four
to five minutes of commercials per hour and offer a lower video quality than
higher-priced tiers. Some programs won’t be available because the company
doesn’t have the rights to show them with commercials.

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Netflix had long positioned its streaming service as a commercial-free
alternative to cable, and has resisted calls to introduce advertising. But with
subscriber growth stalled and its stock in the doldrums, the company is looking
to the lower-priced version of its service with commercials to deliver added
revenue.

In a briefing, company officials said they already have hundreds of advertisers
and have sold out most of their inventory for the service, called Basic with
Ads.



Read More: Ads Are Officially Coming to Netflix. Here’s What That Means for You

Basic with Ads Basic Standard Premium Monthly Cost $6.99 $9.99 $15.49 $19.99
Number of screens you can watch at one time 1 1 2 4 Number of phones or tablets
with downloads 0 1 2 4 Watch on laptop, TV, phone & tablet Yes Yes Yes Yes Ultra
HD No No No Yes Source: Company data



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’s current ad-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.

The company will also make sure viewers don’t see the same ads too many times
using frequency caps.

“We’re confident that with Netflix starting at $6.99 a month, we now have a
price and plan for every fan,” Chief Operating Officer Greg Peters said in a
company statement. “While it’s still very early days, we’re pleased with the
interest from both consumers and the advertising community.”

(Updates with analyst’s comment in seventh paragraph.)

More Must-Read Stories From TIME

--------------------------------------------------------------------------------

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Contact us at letters@time.com.


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