Netflix's New Ad Tier Launching In November With 4 Minutes Of Ads Per Hour - Report

Netflix will put four minutes of ads per hour for TV shows and a pre-roll ad for movies, according to a report.

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Netflix's new ad-based subscription tier will debut in November, according to a new report. Variety claims that Netflix moved up the launch date to get ahead of Disney+, which is launching its own ad tier in December.

The new Netflix ad tier will go live on November 1 in "multiple countries," including the US, Canada, UK, France, and Germany, according to Variety's sources. The tier is rumored to be priced at $7-$9 per month, though nothing is official yet. For comparison, Disney+'s new ad-based tier is $8/month.

"We are still in the early days of deciding how to launch a lower-priced, ad-supported tier and no decisions have been made," a spokesperson for Netflix said.

Netflix is working with an advertising partner, Microsoft, on its new, lower-priced ad-supported tier. According to the report, Netflix and Microsoft are talking to advertisers about rates right now, with Netflix and Microsoft starting discussions at $65 CPM, or cost per thousand views. That's a significant premium over the existing industry rate of around $20 CPM.

Variety's sources said Netflix is conducting a "Dutch auction," which is intentionally setting the price as high as possible and negotiating down to get a more realistic rate. An advertising source told Variety that Netflix is unlikely to actually get $65 CPM.

The report went on to claim that Netflix is asking advertisers to spend a minimum of $10 million and that it wants ad buys to be in place by September 30. The streaming company is telling ad buyers that it expects the new ad-based Netflix tier to have 500,000 customers by the end of 2022, the report said.

Finally, the report says Netflix's first wave of ads won't be tailored to age, gender, viewing behavior, or time of day. Additionally, there will be about four minutes of ads per hour for a Netflix show, the report said. For a movie, there will be a pre-roll ad, a source said.

Netflix announced the new ad-based tier in wake of shrinking subscriber numbers. The idea is to encourage people to come back--or new subscribers to sign up--for a lower cost in exchange for being served ads. According to Ampere Analytics, Netflix's new ad-based tier could bring in $8.5 billion a year by 2027 through subscription fees and ad revenue.

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