SUMMARY
‘Basic with Ads’ will be launched in Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, the UK and the US
The plan will be priced at $6.99 per month in the US and will be launched on November 3
Indian consumers will keep a close eye on the launch of the ad-supported plan in the country where Netflix has been losing subscribers for the last two quarters
After running on a pure-play subscription-based model, streaming colossal Netflix has unveiled its ad-supported plan. Initially, the ad-supported model will be launched in 12 markets. However, India is not on this list.
The ‘Basic with Ads’ plan will be available in Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, the UK and the US. It will be priced at $6.99 per month in the US and will be launched on November 3.
During its Q2 investor call earlier this year, the company said that it would roll out its ad-tier in a handful of markets where advertising spend is significant.
Under the ad-supported model, video quality will be of up to 720p/HD and there would be 4 to 5 minutes of advertisements per hour on an average. On the other hand, a few movies and TV shows won’t be available due to licensing restrictions. Moreover, the users of ‘Basic With Ads’ will not be able to download titles.
Also read: Netflix’s India Glitch
“Basic with Ads also represents an exciting opportunity for advertisers — the chance to reach a diverse audience, including younger viewers who increasingly don’t watch linear TV, in a premium environment with a seamless, high-resolution ads experience,” the company said in a statement.
At launch, the ads will be of a duration of 15 or 30 seconds and will play before and during shows and films.
Netflix will offer targeting capabilities by country and genre, and advertisers will also be able to prevent their ads from appearing on content that might be inconsistent with their brand such as sex, nudity or graphic violence.
The streaming giant has partnered with DoubleVerify and Integral Ad Science to verify the viewability and traffic validity of its ads starting in Q1 2023.
“We’re confident that with Netflix starting at $6.99 a month, we now have a price and plan for every fan. While it’s still very early days, we’re pleased with the interest from both consumers and the advertising community — and couldn’t be more excited about what’s ahead,” the company said.
With more learnings and experience, Netflix expects to launch the ad-supported model in more countries over time.
Netflix’s Struggles In India
The Indian consumers will keep a close eye on the launch of the ad-supported plan in the country. Earlier, Netflix chose India as the first market launch of some of the innovations, like mobile-only plans, before expanding into other countries.
Despite its huge spending and focus on the lucrative Indian market, Netflix has struggled to gain market share in the country. It lost nearly 2 Lakh subscribers globally during the first quarter of 2022, which was followed by the loss of nearly a million subscribers in the second half.
The company competes against the likes of Amazon Prime Video, Disney+Hostar, MX Player, Voot, Zee5, in the Indian OTT market. Currently, Netflix has just 8% share in the Indian market, according to a report by OMDIA.
While the advertising-based freemium model still leads the OTT market in India, experts believe that Netflix can get more subscribers through the launch of the ad-supported model in the country.
According to a Deloitte report, the overall OTT space in India is expected to grow at a CAGR of more than 20% to reach $13 Bn−$15 Bn over the next decade. The Subscription Video on Demand (SVoD) market is expected to grow to $2.1 Bn from $0.8 Bn currently over the same period. Meanwhile, the Advertising-Based Video on Demand’s (AVoD) market size in India is estimated to increase to $2.4 Bn by 2026 from $1.1 Bn currently.
