Everything You Need to Know about Netflix’s New Ad Based Plan

Netflix is preparing for a landmark expansion into advertising-supported streaming as its new subscription plan undercuts Disney Plus by one dollar.

Netflix is one of the most popular streaming platforms in the world, with hits like Stranger Things and Squid Games and a reported subscriber base of 220.7 million as of June.

Saying that the company reversed its long-held position would be an understatement. Co-Founder and Co-CEO Reed Hastings spent years denying that Netflix would ever take the ad route stating that they don’t want to deal with privacy concerns and other complications like Meta.

1. Quoting Hastings from 2020:

We want to be the safe respite where you can explore, you can get stimulated, have fun and enjoy – and have none of the controversy around exploiting users with advertising…

But Netflix was losing out on subscribers due to the non-availability of a pocket-friendly plan. The company lost around 1.2 million subscribers in the first quarter of the year post-pandemic.

That forced the company to contradict its own words and think about a cheaper ad-based subscription plan to gain back its market share.

2. When will the Plan Roll Out?

Netflix’s new plan, ‘Basic with Ads,‘ will set you back $6.99 a month and will be available for purchase from November 3 in the U.S, Australia, Brazil, France, Canada, and Mexico.

Canada and Mexico will get the plan two days earlier, from November 1.

Netflix Spain will get the plan a little later, starting from November 10.

This new plan will be less than half the price of the Standard Plan, which is priced at $15.49.

3. How does it stand up against its competitors?

Disney has also announced a new ad-supported version of Disney Plus. The new plan will launch on December 8 and will be priced at $7.99 monthly. That is one dollar more than Netflix’s counterpart, which might give the latter an edge over its biggest competitor.

After December 8, the ad-free version of Disney Plus will be priced at $10.99, a 3-dollar increase from its previous price of $7.99.

4. Details about the Plan

Netflix COO Greg Peters said that there will be four to five minutes of ads for every hour of streaming.

He clarified that the marquee movies will “just have a pre-roll’ of ads before the film starts playing without any further interruption.

He also said they will try to “preserve that sort of cinematic model there” so that the overall experience doesn’t get hampered.

By contrast, creatives that have “been on the service for a while” will have a more frequent interruption of pre-roll and mid-roll ads with “less frequent” breaks.

One drawback of this plan will be the lack of availability of some creatives during its initial days. In a blog post, Greg Peters said that 5%-10% of the overall pie won’t be available “due to licensing restrictions”. He also said they will work to bring that number down over time.

Downloads will not be allowed on this plan, and the maximum resolution will be capped at 720p, unlike Netflix’s Standard Plan, which maxes out at 1080p.

5. More about the Ads in the New Plan

Netflix’s president of worldwide advertising, Jeremy Gorman, commented that Netflix sold out almost all of its ad inventory long before the launch of its new tier. This new avenue attracted companies from all sectors like automakers, consumer packaged goods, luxury brands, etc.

Advertisers can target viewers based on country, genre, etc., or can run ads on Netflix’s top 10 shows. Brands can also choose not to include their ads in shows that contain graphic violence, nudity, or sex.

Netflix has also teamed up with companies like Integral Ad Science and DoubleVerify to verify the traffic validity of the ads. Ratings agency Nielsen will also provide audience measurement statistics to companies using statistical models.

Both of these services will start in the first quarter of the following year.