Netflix executives appear ready to push ahead with the rollout of the streaming service’s ad-supported tier in a bid to steal an edge over rivals Disney Plus, according to new reports.
Variety reports (opens in new tab) that Netflix executives made the decision to launch the new ad-supported tier on November 1st in most of the streamer’s major markets, including the US, Canada, UK, France and Germany.
The move marks a shift from the official stance that Netflix co-CEOs Ted Sarandos and Reed Hastings revealed during the company’s earnings call last month, when the pair confirmed the new tier wouldn’t be released until 2023.
But now, according to Variety, to try and stay ahead of Disney, which is releasing its cheaper, ad-supported tier on December 8, Netflix is pushing to put it live in early November.
Netflix did not confirm the move and told the Variety reporter that they “…are still in the early days of deciding how to launch a lower tier and ad-supported and no decision has been made.”
Nonetheless, the new report matches information provided to the Wall Street Journal (opens in new tab)which reported that Microsoft, which is providing the platform for advertising on Netflix, has requested that ad buyers submit initial bids next week and are looking for big bids.
How much are we talking?
As its opening salvo, Netflix wants potential advertisers to pay $65 CPM.
CPM is an acronym for cost per thousand impressions, a marketing term used to denote the cost an advertiser pays per thousand ad impressions. For example, if a website publisher charges $2 for each CPM, that means an advertiser must pay $2 for every 1,000 impressions of their ad.
Google’s average CPM is around the $2.80 mark, but it looks like Netflix wants to go premium and the $65 CPM is much higher than the industry standard for pre-rolled ads on a service. streaming service, which costs less than $20.
Additionally, Netflix asked for a minimum commitment of $10 million in annual ad spend from agencies and that purchases be blocked until the end of September. As per the report by Variety, Netflix executives expect to have 500,000 customers in their ad-supported tier by the end of 2022.
As reported over the weekend, it appears that Netflix is targeting a monthly charge of between $7 and $9 for its ad-supported tier, with four minutes of ads in every hour of programming for series and pre-rolled ads for movies. .
For the first phase of launch, potential advertisers will be able to buy from Netflix’s top 10 TV series, with shows like The Crown and Dead To Me likely to be prime targets. The first phase will not, however, allow advertisers to serve ads based on geography within a territory, so it is not allowed to advertise a restaurant that is open in Kansas City but not in Seattle. They also won’t be able to serve ads based on age, gender, viewing behavior or time of day, although you suspect that will all happen over time.
Analysis: Why is Netflix struggling to beat Disney?
When it comes to getting ads on Netflix, things have changed pretty fast.
In early March, the company’s chief financial officer, Spencer Neumann, was still being very conservative about the outlook and went so far as to say that he “could never say never” when asked about the idea of introducing ads to Netflix and went so far as to. clarifying that the change “was not something in [the brand’s] plans now.”
Then, on April 20, during an earnings call, Netflix boss Reed Hastings revealed that the streaming service was “quite open” to the possibility of an ad-supported tier.
An ad-supported tier was then confirmed in July on the company’s upcoming earnings call, but made it clear it wasn’t in the cards until 2023.
We are now in September and calculations and developments that normally take years have rolled out at warp speed and ads will be on the platform on November 1st.
Why Netflix is doing this is not in doubt. It needs more revenue, it needs subscriber growth all over again, and executives are convinced this is the way to go.
Why he needs to get ahead of Disney is less clear. Clearly, there’s a lot of advertising money floating around and for profitable festive campaigns, and the more deals you can close in advance, the better.