According to Variety, the launch of a new ad-supported tier for Netflix will take place this year, despite the fact that investors were led to believe that this was a goal for the year 2023.
The website has received information from sources indicating that November 1 is the new target date; this date is supported by a second article published in the Wall Street Journal.
The earlier-than-expected date is reportedly due in part to a desire to get its lower-cost option in before the arrival of Disney Plus’ ad-supported tier, which is scheduled to take place on December 8th.
According to the source, it will not be a soft launch either, and day-one access will be available in several countries, including large markets such as the United States of America, Canada, the United Kingdom, France, and Germany.
Netflix, on the other hand, did not want to comment or confirm the revised timetable. When questioned by Variety, the firm said that it is “still in the early days of considering how to introduce a lower-priced, ad-supported tier,” and that no decisions have been made about this matter.
That looks more like a non-denial, which is interesting in and of itself considering that the business informed investors back in July that the tier will start “around the beginning of 2023.”
The new tier, which is anticipated to be around $7 to $9 per month billing cycle compared to the existing cheapest cost of $9.99, has disappeared from being an idea Netflix didn’t seem particularly interested in into being the officially accepted strategic approach in a remarkably short amount of time. The price range for the new tier will be between $9.99 and $7.99.
At an investor presentation exactly 177 days ago, the Chief Financial Officer of the business, Spencer Neumann, said that it was simply not “something in our strategy right now.” A little more than a month later, Netflix CEO Reed Hastings told investors that the business was “pretty open” to accounts that were funded by adverts. The plan was formally announced in June with a 2023 goal, and Hastings also told investors that the organization was “very open” to the possibility.
The question now is, what led to this abrupt about-face? Between the original denial and the following disclosure, Netflix saw its first loss in subscribers in more than a decade; this hardly looks like a coincidence. And despite the fact that the corporation was faced with realistic mitigating circumstances — as a result of Russia’s invasion of Ukraine, 700,000 Russian memberships were canceled overnight by Netflix – the urgent need for development meant that some form of extreme action was necessary.
Netflix’s projections on the amount of money it will gain from advertising seem to be somewhat optimistic. According to the story published by Variety, the corporation is reportedly seeking CRM rates of $65, which is much more than the industry median of $20.
A minimum commitment of $10 million in yearly expenditure from potential advertisers is something else that the firm is looking for. If this goal is accomplished, it will undoubtedly help calm the anxieties of investors.
The question of whether or not people would be prepared to pay for a Netflix that was funded by advertisements is still being debated. It is estimated that there would be four minutes of advertisements for every hour of programming, which is far more enticing than the advertising-heavy world of cable TV. Nonetheless, it is projected that the $1 to $3 savings per month may not be enough to get existing customers to leave. Within a few short months, we ought to get an answer, positive or negative.