The Disney+ streaming service and its transition to linear TV: Where are we going? What is next for Netflix, and where do we want to go?
The new option will feature much of what’s available with Netflix’s current $9.99 a month Basic plan, but will include an average of four to five minutes of commercials per hour.
Current plans and members will not be impacted, the company said in a statement.
The interest from both consumers and the advertising community is good, and we couldn’t be more excited about what’s ahead. “As we learn from and improve the experience, we expect to launch in more countries over time.”
Advertising is one way to bring in more revenue for the service. This doesn’t mean all subscribers will have to watch commercials since existing plans will stay ad-free, but there will now be a choice between a cheaper ad-supported plan and a premium one.
Hastings had been adamant that there would be no ads on the service and in April he said it was possible to add commercials.
The announcement comes after the company this year suffered a drop in subscribers for the first time in more than a decade, losing as many as 200,000 in this year’s first quarter. The company laid off at least 150 employees and dozens of contractors in May.
In July, Netflix announced that it will partner with Microsoft
(MSFT) to enhance sales and technology for this new subscription plan.
It is a prophecy that can be self-fulfilling. In July, Reed Hastings predicted that linear TV would be dead within 10 years. It wasn’t something he said that the streaming service would just emerge in its place. The deals are a little different—the ads on streaming are fewer than on network TV; network TV is free—but with each one, streaming looks a little more like the television of 50 years ago. (See also: Starting in 2023, Netflix will be tracked by Nielsen—a huge move for a company that has closely guarded its viewership numbers.) Linear TV might be ending, but its replacement isn’t much more than meets the eye.
Netflix will introduce a lower-priced plan with ads in November after suffering a drop in subscribers and facing growing competition from other streaming providers.
Disney+ has millions of subscribers as its rival, streaming services such as Netflix, struggle to retain subscribers. Disney+ added more than 14 million subscribers in the second quarter of this year.
A Letter to the Cosmic Component Industry on April 10, 2009, via an e-mail correspondence to be published in the New York Times, Vol. 12 (Newton)
“We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction,” the letter read.
“As we’ve been discussing over the past few quarters, improving our pricing strategy is an important near-term focus,” the company wrote last month, adding that the “reaction from advertisers so far has been extremely positive.”