Netflix launches its basic ad-supported service in the US

Netflix announced that starting this Thursday it will launch its new ad-supported streaming service. The company revealed some successful contracts with renowned advertisers for its launch and has hired a team of advertising industry professionals to successfully develop this new branch of its business.

This launch, made public after the first quarterly report of the year, comes a month before Disney + launches a similar plan. The service became known as “Basic with Ads”.

As we have commented on several occasions, this announcement comes as a result of an emerging strategy to try to achieve a greater number of subscribers after a significant setback in audiences derived from increased competition among other factors.

A month ago, Netflix announced that this ad-supported plan would cost $6.99 in the US and include four to five minutes of ads per hour of content, and hopefully the audience migrating to these plans will be families of current subscribers. lower income or older audiences.

One of the great challenges that Netflix has had is negotiating with content creators to insert advertising during broadcasts. According to a WSJ post by Suzanne Vranica, Joe Flint and Sarah Krouse, some of the studios with whom Netflix has not finalized revised license agreements include Walt Disney Co., Comcast Corp.’s CMCSA, NBCUniversal, Sony Pictures Television, Warner Bros. Discovery Inc. and Lions Gate Entertainment Corp.

According to the same source, while studios like Disney don’t create original content for Netflix, they do offer reruns of popular shows like “Grey’s Anatomy” and “How to Get Away with Murder.” On the other hand, NBCUniversal is a large provider of library and original content for Netflix, including the drama “You.”

Talks also continue with Sony Pictures Television, which produces “The Crown” and “Cobra Kai” and sells its theatrical films and reruns of “Breaking Bad” to the broadcaster.

Originally, and perhaps unofficially, Netflix had announced advertising rates of $65 for a thousand viewers reach, but it’s likely that several of the big advertisers who have agreed to try this new plan have negotiated rates significantly, considering that today’s advertisers they have become more demanding and efficient in terms of their advertising investments derived from the wide range of options.

It is exciting to see how a giant of this size reinvents itself and is willing to share risks with all participants in order to get the company through a chaotic year.