Netflix has announced plans to launch a lower-cost, ad-supported plan in the first quarter of 2023.
In a Q2 letter to shareholders, the company revealed that the plan will be tested in a few of its markets where “advertising spend is significant.”
“We’ll likely start in a handful of markets where advertising spend is significant,” according to the letter obtained by Variety. “Like most of our new initiatives, our intention is to roll it out, listen and learn, and iterate quickly to improve the offering.” So, in a few years, our advertising business will most likely look very different than it does today.”
The plan was confirmed in April, after Netflix announced a staggering loss of 200,000 subscribers and attempts to crack down on password sharing. While pricing for the newly launched plan has yet to be confirmed, the service claims it will offer a lower subscription rate. It is unlikely that its Nigerian market will be explored in the early ad-supported launch.
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The announcement comes on the heels of reports that Netflix has signed an exclusive agreement with Microsoft to serve as its advertising partner. “Microsoft is investing heavily to expand their multibillion [dollar] advertising business into premium television video, and we are thrilled to be working with such a strong global partner,” the letter stated.
“We’re excited about the opportunity because of our very engaged audience and high-quality content, which we believe will attract premium CPMs [cost per thousand impressions] from brand advertisers.”
According to Ted Sarandos, co-CEO and chief content officer, Netflix is currently in talks with some of its content providers about rights issues ahead of the ad-supported launch.
