Netflix’s cheaper ad tier could arrive earlier than expected

·3 min read

Although Netflix announced to the world in July that it is launching its ad-supported version in early 2023, the streamer could be changing its plans. As reported by The Wall Street Journal on Wednesday, Netflix execs told ad buyers the launch date would now be November 1, 2022. If this ends up being the case, Netflix could be launching its lower-priced ad tier a month ahead of its competitor Disney+.

Netflix and Disney+ have been racing to roll out a cheaper ad-supported plan as the two streaming giants look for ways to make a profit and appeal to more money-conscious subscribers. Sources told Variety that Netflix plans to launch in multiple countries, including the United States, U.K., Canada, France and Germany. Disney+ will initially launch in the U.S. in 2022 before expanding to international markets the following year.

"We are still in the early days of deciding how to launch a lower-priced, ad-supported tier, and no decisions have been made. So this is all just speculation at this point," a Netflix spokesperson told us.

Sources revealed to The WSJ that the streaming service is planning to charge advertisers approximately $65 for every 1,000 views. Netflix is only allowing brands to spend $20 million per year to guarantee subscribers don’t see the same ad too frequently, sources added.

The hefty CPM (cost per thousand) price points to the company’s high expectations for the incoming ad-supported platform and that it is confident buyers will have a strong enough interest to cough up the cash. Ad buyers mentioned that it is typical for newcomers in the advertising space to pursue high prices and then settle for lower later on.

In comparison, Disney+ is demanding roughly $50 to $60 CPM, the Journal previously reported.

When looking at ad load, buyers allege that Netflix’s ad-supported tier will have an ad load of about four minutes per hour for TV shows. For movies, the streaming giant will run pre-roll ads, Variety wrote.

Bloomberg reported earlier this month that kids’ programming on Netflix would remain commercial-free. There has been speculation that original movies would initially stay ad-free as well.

This is similar to Disney+’s plan, which confirmed to TechCrunch in May that it would have a light ad load to an average of four minutes of ads an hour. Preschool programming will have zero commercials on the family-friendly streamer.

While we don’t know how much Netflix’s ad tier will be, the rumored cost is anywhere from $7 to $9 per month. Rival Disney confirmed in its recent earnings call that its flagship streaming service Disney+ would charge subscribers $7.99 per month.

Recent reports have also declared that Netflix won’t allow offline viewing in its ad plan. Many of Netflix’s plans aren’t confirmed, so anything could change as the company builds out the ad-supported plan.

The 25-year-old streaming service has made a few confirmed moves, however, including partnering with Microsoft to help launch the ad tier. Netflix also confirmed during its July earnings call that the ad-supported plan wouldn’t have its entire content catalog when it first launches due to licensing deals, so advertisers won’t get to buy ads for certain titles — at least initially.

The company also recently hired two Snap Inc. executives, Jeremi Gorman and Peter Naylor, to lead its advertising business.