Netflix on Thursday said a subscription option subsidized by ads will debut
in November in a dozen countries as the streaming service strives to jumpstart
growth.
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Basic with Ads subscriptions will be priced at $6.99 in the United States,
three dollars less than a basic option without ads, Netflix chief operating
officer Greg Peters said in a briefing.
"The timing is great because we really are at this pivotal moment in
the entertainment industry and evolution of that industry," Peters said.
"Now streaming has surpassed both broadcast and cable for total TV time
in the United States."
The ad-discounted tier, a first for Netflix, will roll out in Australia,
Brazil, Britain, Canada, France, Germany, Italy, Japan, South Korea, Mexico,
Spain and the United States.
Nearly all of the Netflix library will be available, with some offerings
held back until licensing deals are renegotiated.
Video ads will be from 15 seconds to 30 seconds long.
"We are looking at a very light ad load with no more than four to five
minutes of ads per hour, and including some very tight frequency caps so that
members don't see the same ad repeatedly," Peters said.
After long shunning advertising, Netflix pushed ahead as competition in the
streaming television market intensifies and as consumers recoil from soaring
inflation.
With the launch of cheaper, ad-supported subscriptions, Netflix and Disney+
are expected to bite into the revenue of traditional television channels.
Netflix rival Disney+ is expected to launch its own ad-subsidized
subscription soon.
"These launches are going to create the biggest premium advertising
space in more than a generation," said analytics company Samba TV senior
vice president Dallas Lawrence.
"It's going to be a major moment for advertisers."
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