The Streaming Wars are ramping up again. This time platforms like Netflix and Disney+ are going to offer ad supported tiers for a lower cost option for potential and existing customers. Now, Netflix just announced they will be opening their ad-supported tier in November instead of original “2023” time frame. This puts the streamer ahead of Disney+ and their ad-supported tier. On top of that Netflix recently just got two of Snap’s top ad executives as well.
Disney had announced that they would be offering their “lower cost option”(which isn’t actually lower, the current price will be the ad supported cost while other options will be more expensive.) Disney+ plans to roll out their plan starting on December 8, 2022. Netflix is now rolling theirs out, more than a month ahead, on November 1 On that date the new tier will be available in multiple countries including the U.S., Canada, U.K., France and Germany.
Netflix has yet to announce their ad-supported pricing but it is likely to be somewhere in the range of $7-$9 a month.
That’s a significant price reduction for some subscribers. The ads don’t sound like they will be very intrusive either with reports of them running only once per hour of a show or pre-rolled before films. Reportedly they will also use “frequency caps (how often an ad spot may be served to individual viewers) of one per hour and three per day per viewer.”
What’s even more interesting is the prices that Netflix is demanding for their ad spots.
They are wanting advertisers to pay $65 CPM ($65 per/1,000 viewers) which according to Variety is almost 2-3X industry standard at about $20-$30 CPM. It is a stretch but Disney+ is seeking $50 CPM which is about 2X the average and HBO Max was asking $40 CPM. It’s not as terrible when you know what other streamers are charging, but it’s still a lot higher.
Netflix is also reportedly asking for a $10 million minimum commitment for annual ad spending on top of the high CPM. The company seems to be trying confirm ad buys by Sept. 30 to launch the new tier on November 1.
Moving into November puts them in place to cash in on holiday advertising and political advertising (if they choose to run political ads.) It might make the high cost appealing to advertisers as many are predicting record ad spends this year. Add to this the limited advertising spaces and it might entice advertisers to pay the higher costs for the available spots.
But Variety thinks Netflix’s price might be a hard sell:
“My guess is they won’t get that.” The feedback from brands is “very much wait-and-see,” the source added. “At anything above $20 [CPM], the feeling is, ‘Let’s let other advertisers wade into that pool first.’”
It’s also important to note that Netflix’s ad-supported tier will have limited targeting:
“Initially, Netflix’s ad-supported service will not have any third-party attribution. It also will have limited targeting ability: Advertisers will be able to buy against Netflix’s top 10 most-viewed TV series and against some content genres. But for the first phase of the ad tier’s rollout, Netflix will not serve ads based on geography (except by country), age, gender, viewing behavior or time of day.”
It’s going to get interesting that’s for sure! Disney+ Day is coming on September 8 and I have to wonder if they will announce their ad-supported option will be launching sooner now too?
What do you think? Comment and let us know!
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