Netflix Launches Ad-Supported SVOD Service in 12 Countries, Including the U.S.

Netflix Nov. 3 officially launched its much-hyped ad-supported subscription streaming VOD option across 12 territories, including the United States.

Priced at $6.99 ($5.99 Canadian), the “Basic with Ads” service option offers subscribers content with video resolution limited to 720p/HD (both basic with ads and basic without ads plans); average of 4 to 5 minutes of ads per hour, and no ability to download titles. A limited number of movies and TV shows won’t be available due to licensing restrictions.

Tiffany & Co.’s ad featuring Beyoncé was the first ad to ever run on the ad-supported service in Canada on Nov. 1, and subscribers in 12 countries can expect to see ads from GM, L’Oreal, McDonald’s, LVMH, Subway, Target, Heinz and Carnival Cruises, among others.

Basic with Ads is everything people love about Netflix, at a lower price, with a few ads in-between,” Greg Peters, chief operating officer and chief product officer, wrote in a statement last month. Netflix launched the ad-supported option just six months after first announcing it publicly.

The streamer’s current basic plan without ads costs $9.99 monthly, with the standard ad-free plan priced at $15.49, and the premium option priced at $19.99. The streamer still offers its legacy by-mail DVD rentals, priced at $9.99 for one disc out at a time; $14.99 for two discs, and $19.99 for three discs rented concurrently.

Rival Disney+ is set to launch its lower-priced ($6.99) ad-supported SVOD option on Dec. 8.

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Samba TV: Nearly Half of Netflix Subscribers Open to Shifting to Ad-Supported Tier

A new survey found that nearly half of all current Netflix subscribers would consider shifting to an ad-supported model once it becomes available.

Netflix is set to launch a lower-priced ad-supported subscription option before the end of the year. As the world’s largest standalone SVOD service, Netflix’s foray into ad-supported streaming, after a decade of eschewing advertising of any kind, has generated significant attention among new and existing subscribers.

The move comes as Netflix has posted several consecutive quarters of net subscriber losses in the United States.

Data from 2,500 respondents (1,300 non-Netflix subs) in a new Samba TV/Harris X online survey conducted Aug. 29 to Sept. 1 found that 46% of Netflix subscribers might shift to an ad-supported model. Key to the SVOD pioneer and Wall Street is where those ad-supported subs will come from. The survey included 782 millennials, 202 Gen Z, and 1,645 adults who are parents.

Samba found that 92% of non-Netflix users now watch ad-supported streaming platforms. This demo represents younger consumers (33% under 35) open to ads.
 
The percentage of current Netflix users who would consider shifting to an ad-supported model grows to 51% should the service be free with a maximum of five minutes of ads per hour of programming.
 
Another 41% of Netflix users state that they would consider switching to a free monthly tier which had seven minutes of ads per hour. About 30% of Netflix users state they would consider switching to a free monthly tier that had 10 minutes of ads per hour.
 
 
Nearly 50% of Netflix users state they would consider switching to a tier that was discounted by half of what they currently pay, but had to watch five minutes or less of ads per hour.
 
Samba contends that five minutes of commercials per hour is the maximum threshold of ads most subscribers are willing to consider. Double the ad minutes, and consumer interest drops below one-third.
 
Current Netflix users who would be most interested in shifting to an ad-supported tier tend to tilt older and middle-to-lower income, suggesting that the lower-priced existing Netflix subscription tiers are most likely to shift to the ad model.
 
“[Ninety percent] of adults who do not currently have a Netflix subscription watch other ad-supported content today, indicating these audiences have no aversion to watching ads in exchange for free, or reduced-price content,” Samba TV CEO/co-founder Ashwin Navin said in a statement.
 
Additional survey results indicated that a majority of baby boomers (52%) and nearly half of Gen X (48%) would make the shift. A majority of those making under $75,000 expressed an interest in moving to an ad-supported tier, whereas less than half of those making over $75,000 were interested (42%).
 
Younger audiences who have only known a streaming-first world with no or very few ads report far less interest in shifting to an ad-supported tier. Only 38% of existing Gen Z Netflix subscribers report being interested in shifting to an ad-supported tier.
 

Netflix Projecting 40 Million Ad-Supported Subscribers by Late 2023

Netflix — which is set to launch a less-expensive ad-supported subscription streaming VOD service in the fourth quarter to rival a similar service Disney+ is launching in December — expects to generate upwards of 40 million ad-supported global subscribers by late 2023, according to a report by The Wall Street Journal.

The paper cited the streamer’s own estimates given to ad buyers and reviewed by the media outlet.

Netflix, which is selling ads on the platform to marketers through an agreement with Microsoft, reportedly expects to generate 4.4 million subs by the end of this year, including 1.1 million in the United States. The 40 million global subs include 13.3 million in the United States.

The ad-supported markets also include Brazil, Mexico, Japan, the United Kingdom, France, Germany, Korea, Spain, Italy, Australia and Canada.

The sub growth projections are ambitious considering Netflix’s existing SVOD service subscriber growth has stagnated at around 220 million, with the platform losing significant numbers of subs across all of its markets except the Asia Pacific region in the most recent fiscal period, ended June 30.

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The streaming pioneer heretofore rejected advertising on its platform, arguing ongoing SVOD subscriber growth negated the need for a less-expensive tier with ads. Then came fiscal 2022, when Netflix reported subscriber losses in both quarters of the first half, including an unexpected 200,000 sub loss in Q1 after it had projected a sub gain of around 2.5 million.

“We are still in the early days of deciding how to launch a lower-priced, ad-supported tier and no decisions have been made,” Netflix said in a media statement.