Netflix has revealed its plans for a lower-cost ad-supported service, betting that a $6.99-a-month option for consumers will help it boost revenue during tough economic times. more difficult.
Reed Hastings, chief executive officer, reversed his longstanding opposition to ad support earlier this year, as the company’s once explosive subscriber growth rate go against in a sign of market saturation in North America.
Greg Peters, Netflix CEO, said: The new ad-supported service, launching in November, will “increase memberships and, over time, build a significant stream of incremental revenue and profits.” ” in 12 countries. , on Thursday.
The ad tier will force Netflix to provide viewership metrics they’ve long resisted releasing, including audience size. Starting next year, the company will partner with Nielsen, the ratings service, to measure and verify how many people in the United States have seen an ad.
Netflix’s subscriber warning this year has spooked investors, who have rejected the growth-at-all-cost streaming wars and are demanding a path to sustainable profitable growth be found. steady. This led Disney Plus to announce that it would be rolling out an ad tier in December for $7.99, while also increasing the price for customers who want to watch without ads. Other streaming services, including Hulu, Paramount Plus, and Peacock already offer ad-supported versions.
Morgan Stanley estimates Netflix could raise up to $3 billion a year from advertising by 2026, but expects most of that to be generated by subscribers trading from the ad-free membership tier.
Read more about Netflix’s ad-supported options here.