Potential subscribers may be getting answers very soon, as a new report from Bloomberg reveals that the streaming giant is getting closer to finalizing the details of its ad-supported model. The company reportedly plans to add four minutes of commercials to every hour of programming, and is aiming for a price point between $7 and $9 per month when it launches later this year. By comparison, Netflix’s standard subscription currently costs $15.49 per month. The company also offers a basic subscription that only allows viewers to stream in standard definition and use one screen at a time, for $9.99 a month. There is also a premium subscription option for $19.99 per month. The company appears to be betting that a 50% discount on a standard subscription is worth watching four minutes of ads per hour.
Netflix is planning a gradual rollout for its new product, as the report says the streamer is planning to test the ad-supported model in six markets by the end of the year. Its current plan is to show ads before and during shows, but not after. The sales team is reportedly telling potential ad buyers that it prefers to make smaller deals in order to avoid overwhelming viewers with the same ads over and over again. Netflix has long been open about its intentions to eventually launch an ad-supported subscription tier. As the company faced dwindling subscriber growth and plunging stock prices earlier this year, it elaborated on those plans in a letter to shareholders. “Our intention is to roll it out, listen and learn, and iterate quickly to improve the offering,” the letter reads. “Over time, our hope is to create a better-than-linear-TV advertisement model that’s more seamless and relevant for consumers, and more effective for our advertising partners. While it will take some time to grow our member base for the ad tier and the associated ad revenues, over the long run, we think advertising can enable substantial incremental membership (through lower prices) and profit growth (through ad revenues).” Sign Up: Stay on top of the latest breaking film and TV news! Sign up for our Email Newsletters here.
