Netflix loses fewer subscribers than expected
Netflix is giving Canadian viewers the option for a cheaper monthly subscription plan — as long as they're willing to sit through commercial breaks.
The streaming giant said it has marked Nov. 1 to launch its new ad-supported streaming tier in Canada for $5.99 per month. The price is significantly less than Netflix's ad-free plans which start at $9.99 and go as high as $20.99 a month.
In exchange for the savings, Netflix said subscribers will see an average of four to five minutes of ads per hour placed before and during TV shows and films.
Netflix said the pricing for its existing plans will not be affected by the introduction of the ad tier.
The experience drifts away from Netflix's insistence for years that it would never stray into ad breaks during its programs, a choice the company has said helped build its reputation.
But competition in the streaming space has intensified in recent years with newcomer Disney Plus quickly encroaching on the company's status as the most popular streaming service. Wall Street analysts have raised concerns that a decline in Netflix subscribers earlier this year may continue if more people switch to alternative platforms.
"We want to offer consumers choice and for them to figure out what is the best offering for them," Greg Peters, Netflix's chief operating officer, told reporters in a conference call.
"And that could mean some of our existing members shift off of a plan that doesn't include ads into this basic with ads plan. But if that's the better experience for them in terms of the price ... then we want to enable them to do that."
However, not everything in the Netflix library will be available on the ad tier and subscribers won't have the option to download titles for remote viewing.
Those limitations are due to licensing agreements with the distributors and will vary by country, Peters said. He estimated roughly five to 10 per cent of TV and films on the higher-priced tiers will be missing from the ad tier.
The experience of breaks will be similar to what viewers have seen on other platforms, including Bell Media's free CTV streaming library.
Before the program begins, a limited run of 15- and 30-second ads will play, while during the show, there will be fade-outs to a commercial at natural times in the narrative.
In the press briefing, Netflix executives used an example from "Emily in Paris" where the commercial break was placed between the end of dialogue at a restaurant and the establishing shot of a new scene on the streets of Paris.
Netflix movies will take a slightly different approach that aims to "preserve the cinematic model" for new titles, according to Peters. Instead of placing commercials within the film, recent releases will have pre-roll ads only, while mid-roll ads will be introduced after the title has been available for an undetermined period of time.
Advertising will eventually be targeted by the specifics of a user's profile which will require people at sign up to provide their date of birth and gender — with the options of male, female or neither/prefer not to say. However, executives said that ads will only be targeted to genre and not more specific user demographics on the launch date.
In the United States, several of Netflix's competitors have already launched ad-supported tiers which trade occasional commercial breaks for a lower subscription price.
HBO Max, Peacock and Paramount Plus are among the companies that have the option stateside, while Disney Plus has outlined plans to begin offering its own version in the coming months.
Netflix rolls out the advertising tier in Canada two days before most other major markets. It will introduce the option in countries that include the United States, Brazil, France and the United Kingdom on Nov. 3.