Netflix Drops Disney+’s price by $1 a month as it prepares for a historic expansion in Advertising-support flow.
The company said the new subscription tier, Basic with Ads, will cost $6.99 per month and launch November 3 in the US, more than a month before Disney launches the December 8 ad-supported version of Disney+. Canada and Mexico will get the new plan on November 1, and two days later it will be rolled out to the US, Australia, Brazil, France, Germany, Italy, Japan, Korea and the UK, Spain to follow on November 10. In the US, the entry level will be priced at less than half the cost of the most popular tier, Standard, which is $15.49 per month.
Disney has announced price hikes and a new ad-supported version of Disney+. When this new category launches on December 8, it will be $7.99 a month, which is the currently standalone price for ad-free Disney+. After December 8, ad-free Disney+ will be $10.99, though many consumers opt for the Disney+, Hulu, and ESPN+ bundle, which offer savings over the regular price of each.
In a blog post, Netflix COO Greg Peters said there will be four to five minutes of ads per hour, with both series and feature films interrupted by splashes. (Watch a video below showing what it would look like.)
It’s almost out of stock, said Jeremy Gorman, Netflix’s head of global advertising, with several hundred advertisers in the mix. When asked during a Zoom call with members of the press about how much advertisers pay, she declined to provide details. For categories, political will will be a notable no-fly zone given how high it has been in linear television in recent election cycles, along with others such as guns, smoking or plugs for any products and services that Netflix deems illegal.
When asked on a Zoom call to expand on the in-movie ad plan, Peters clarified that new movies coming to the service — particularly original movies like knives out 2 – You will only get a preview of the patches before turning on the feature without interruption. “We’ll try to keep that kind of cinematic model out there,” consistent with the way most competitors handle it. By contrast, Peters said films that have “been in service for a while” will have a more “traditional” mix of pre-roll and in-run ads, albeit with “less frequent” breaks.
It’s hard to overstate the degree to which the company has reversed its old stance in advertising. Co-founder and co-CEO Reed Hastings and other executives have spent years denying that Netflix will work with Madison Avenue, with Hastings indicating his desire to avoid the tangles over privacy and other complications that have held back Facebook and other digital giants. “We want us to be a safe respite where you can explore, motivate, have fun and have fun — and we don’t have any arguments about exploiting users with ads,” Hastings said on the 2020 earnings call.
This was during the relatively perishable days. In 2020, with Covid shutting down the world, Netflix saw a massive surge in subscriptions, adding 26 million paying customers in the first half of the year alone – the total for the whole of 2019.
This year, the impact of inflation and a deteriorating economy on consumers as well as intense competition in the subscription-streaming race that Netflix was managing almost on its own, have combined to create new headwinds. When Netflix published two consecutive quarters of disappointing subscriber numbers — and even lost total subscribers for the first time in more than a decade — the blunder led to a massive sell-off in Netflix stock and led to a host of changes in the company. In addition to reducing costs and simplifying its employees, the company decided to change its attitude to advertising, sensing the possibility of adding billions in revenue. A partnership with Microsoft has been announced and two senior Snap officials, including former Hulu ad sales chief Peter Naylor, have been appointed to lead the Netflix brand campaign.
Not all programs will carry advertisements at launch. The blog post noted that “a limited number of movies and TV shows will not be available” on Basic with Ads “due to licensing restrictions, which we are working on.” During the press call, Peters said the missing addresses represented about 5% to 10% of the total pie. “It’s all based on deals, not on a particular studio,” he said. “And again, we will work to reduce that number over time.” Most previous agreements with content suppliers were written “in a time frame before when we weren’t thinking about doing an ad-based tier”. As Peters noted at the top of the call, it’s only been six months since Hastings surprised Wall Street and the media business by apparently neglecting to point out the advertising plan during a quarterly earnings call and the market entry plan being finalized.
The blog post also noted that Netflix has teamed up with DoubleVerify and Integral Ad Science to “verify the viewability and traffic validity of our ads” starting in the first quarter of 2023. Also next year, Nielsen will use digital ad ratings in the US, enabling the measurement company From providing an idea of how viewership is going, to eventually reporting the numbers with Nielsen ONE’s long-running show.
Downloads will not be allowed in Basic with Ads and the resolution is 720p, not as sharp as 1080p for the standard Netflix plan, which is the most popular.
Take a look at the ad experience on Netflix, with this example provided by the company of what the venue would look like before an episode of Emily in Paris:
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”