Netflix ad tier to launch before the end of the year

Netflix has announced its plan to launch an advertising subscription tier in Australia before the year's end, in partnership with Microsoft.

Playing before an episode or film starts, the unskippable ad tier is expected to cost $8, less than the cost of Netflix’s essential streaming subscription.

Local media sources provided comments under anonymity, as they are not yet authorised to speak publicly about the rollout. Sources revealed that Netflix is in the discussion with local advertisers to roll out the ads, saying: “We are still in the early days of deciding how to launch a lower priced, ad-supported option and no decisions have been made. This is all just speculation at this point,” the spokesperson said.

Mediaweek reported on the ad tier in May, dissecting the ramifications for advertisers and consumers. Speculation of an ad tier began after Netflix’s share price fell dramatically in April after the news broke that the streaming giant had lost 200,000 subscribers globally. Following the announcement, the speculation was confirmed by an announcement from Netflix’s co-CEO Reed Hastings about a prospective ad-supported tier.

Mediaweek spoke to Andrew Gilbert, head of platform strategy for Australia & New Zealand at Yahoo, Gilbert said the supply of advertising space is very important. He said: “When you start to get access to more and more premium supply, that just means better things for brands and marketers and their ability to achieve their objectives.

“If Netflix or any of the other subscriber platforms like Disney, etc, start to open that up, it just means more and more capabilities and more abilities for brands to be able to do that, and for us to be able to grow with those brands at the same time.”

Expected to launch as early as November, Netflix has decided to reject political, gambling and cryptocurrency advertising, and will also not market any products to children. The streaming giant is still considering restrictions on pharmaceuticals, the sources said.

Netflix is not the first streaming service with an ad-supported subscription. Paramount and Amazon Prime Video already offer a hybrid model, while Disney has announced its own plans for an ad-supported streaming tier.