Home » The Netflix Ad Rollout is Here- Now What?

The Netflix Ad Rollout is Here- Now What?

by Nathan Zachary
Entertainment Attorney

The day many once believed would never come has finally arrived- and it doesn’t look quite like we expected! Netflix have finally unpacked some tangible details around their new pricing tier, simply called ‘Basic with Ads’. Our entertainment attorney on the ground, Brandon Blake of Blake & Wang P.A, has all the information.

Basic with Ads: The New Tier

This latest addition to the Netflix tier offerings will roll out to 12 countries, including the US, from November 2022. It’s priced about 30% lower than their current Basic tier, at $6.99 (vs $9.99). Unlike the Basic tier, there will be no downloading at all- yet. This is primarily cited as due to complications with deploying the advertising within downloaded content, so anyone hoping to bypass this small annoyance will be out of luck for now. We’ve also been told that 5-10% of Netflix’s available programming will not be available on this tier- presumably their hottest premium content or content with licensing restrictions.

It will receive content streamable in 720p, or HD. They have also announced an upgrade for their Basic plan (without adverts) from the current 480p streaming quality to match the 720p on offer on the ad-supported tier. This joins their Standard ad-free, 1080p quality, ad-less tier ($15.49) and their Premium tier ($19.99), which offers add-ons like 4k resolution as well as 4 device downloads (the other plans are tied to 2 maximum).

For some, it sounds like a tier too far, even for Netflix’s perceived premium stance in the streaming market. Of course, adaptation and consolidation have been two themes of this year, so it’s possible we may see the AVOD tier merge with their basic plan over time. Additionally, and rather impressively, this announcement also means that Netflix’s ad-supported tier will roll out a month before Disney+ launches their own version.

It is anticipated that viewers will have 4-5 minutes of commercials per hour of streaming. Ads are currently capped at 15-30 seconds, and will be shown before and during watched content.

A Long Time Coming

With streamers across the board turning to ad-supported plans to maximize their subscription base, we knew we would see ads on Netflix eventually. When their stock price took a beating early in 2022, it became near-inevitable.

The new tier does have some potential. For starters, it could allow for greater growth in low-income international markets who have been unable to meet the dollar-set pricing. And, as becoming choosier about running multiple service subscriptions becomes the norm, it could give viewers enough incentive to hang onto Netflix aside other premium streamers. And despite rather steep CPMs, they report being ‘nearly sold out’ on the advertiser side.

We’ve seen similar support from the stock market, where Netflix has finally seen some gains after the announcement. Current predictions are that as much as 15-25% of the current Netflix user base may opt to downgrade to the new plan. Additionally, it’s anticipated that around 5 million new (or potentially returning) subscribers will take up the new option.

For now we can only wait and see how the ad-supported Netflix plan will perform with subscribers, but it’s nice to finally see some concrete details on the new tier released.

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