Netflix’s new ad-supported plan is launching in 12 countries on Thursday as advertisers, investors, and the big studios are eager to see if the streaming giant will be able to attract even more people to its platform.
The new ad-based subscription plan, announced in mid-October, is cheaper than a basic plan without ads – members in the United States, for example, will have to fork out $6.99 per month. Users in the United Kingdom will pay £4.99 every month.
Officially, the new tier is called Basic with Adverts and is available in Australia, Brazil, Canada, France, Germany, Italy, Japan, South Korea, Mexico, Spain, the UK, and the US.
As the recently-released third quarter earnings show, Netflix is still profitable and is again attracting millions of new subscribers – but the company wants more revenue because competition is constantly growing.
Besides, worries about subscription fatigue fail to subside since the platform’s subscriber base shrank for two consecutive quarters this year. This led to a halving of Netflix’s market value.
“Basic with Adverts also represents an exciting opportunity for advertisers – the chance to reach a diverse audience, including younger viewers who increasingly don’t watch linear TV, in a premium environment with a seamless, high-resolution adverts experience,” Netflix said in October.
Even though the new plan is cheaper, users will have to get used to ads that will play for four to five minutes per hour of streaming. What’s more, subscribers to Basic with Adverts will not be able to download titles.
Finally, Netflix admits that up to 10% of films and TV series will not be available due to licensing restrictions. The number of unavailable titles varies from country to country.
That’s because the streaming giant does not own some of its popular shows, such as Gilmore Girls or Friends. These are licensed by rival studios such as Universal, Sony, and Warner Bros.
In some cases, agreements were drafted back when Netflix had been against advertising on the platform and did not allow to run the content on an ad-supported tier if such a plan was ever launched – which it was.
Major studios have been negotiating with the streaming company about licenses for months now. One of the issues they will surely be keen to discuss is how to split the ad revenue.
For now, Netflix insists the new ad-supported tier is not a revenue-sharing model, but, as the Financial Times reports, the industry expects the position to change soon.
Besides, the studios and talent hope to regain some of the performance-based pay. For instance, Squid Game was hugely popular, but the talent behind the show was only paid what was agreed in the original contract.
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