Netflix to unveil ad-supported plan in November across 12 countries

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Netflix is launching its US$6.99 per month ad-supported plan, Basic with Ads, on 3 November. The new plan will include an average of four to five minutes of commercials each hour and the inability to download titles. There is also a limited number of movies and TV shows that won’t be available due to licensing restrictions, which Netflix is currently working on. At launch, commercials will be 15 or 30 seconds in length and will play before and during shows and films. Netflix’s current plans and members will not be impacted.

This comes months after Netflix first mulled ad-supported plans in April despite its co-CEO Reed Hastings being opposed to it for a long time. The Basic with Ads tier will be available in 12 countries - Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, the UK and the US. Netflix has also partnered with DoubleVerify and Integral Ad Science to verify the viewability and traffic validity of its ads beginning the first quarter of 2023.

In the US, Netflix is also using Nielsen's digital audience measurement to offer advertisers a better understanding of the platform's reach. According to CNBC, the Nielsen ratings will begin sometime next year and this is the first time Netflix will have ratings available for its content.

To help advertisers reach the right audience and ensure ads are more relevant for consumers, Netflix said it offers broad targeting capabilities by country and genre. Advertisers will also be able to prevent their ads from appearing on content that might be inconsistent with their brands, such as nudity or graphic violence.

Aside from DoubleVerify, IAS and Nielsen, Netflix is also working with Microsoft as its tech and sales partner for the ad-supported subscription offering. It previously explained that all ads served on Netflix will be exclusively available through the Microsoft platform. This partnership also allows Microsoft to break into the streaming space, given that tech giant doesn't currently own a streaming platform unlike Google with YouTube or Comcast with Peacock.

Netflix said in a statement that the switch from linear is happening at an ever-increasing speed, with streaming now surpassing broadcast and cable in the US. "While it’s still very early days, we’re pleased with the interest from both consumers and the advertising community — and couldn’t be more excited about what’s ahead," the streaming platform said. It added that as it learns from and improves the experience, it expects to launch in more countries over time.

The streaming platform experienced its first dip in paid subscribers in over a decade earlier this year, when it reported a loss of 200,000 subscribers.

While it remains to be seen if Netflix's ad-supported strategy will pay off, the company as well as its advertisers would be comforted to know that 88% of OTT viewers in Southeast Asia are open to seeing ads in exchange for free content. According to a previous study by The Trade Desk, 89% of consumers are willing to watch two or more ads per hour of free content.

Mitch Waters, SVP of Southeast Asia, India, Australia and New Zealand, told MARKETING-INTERACTIVE previously that with platforms such as Netflix moving towards an ad-supported model, it is proof that OTT has established itself as a credible channel. He also expects more brands will be keen to learn about running campaigns on OTT.

At the same time, Ranganathan Somanathan, co-founder of RSquared Global Ventures, was also of the view previously that there is always a space for paid subscription. This offers Netflix the opportunity to consolidate and strengthen its leadership position.

"Rather than just squeezing the bottom of the marketing funnel for more, it is about time they pivoted and took a more balanced approach to brand building, with serious investments at the top or mid-funnel," he added.

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