Netflix is ”pleased with the growth we’re seeing” at ad-supported levels since launching two months ago, said Jeremy Gorman, president of global advertising.
Gorman, speaking on Friday diversityAt its Entertainment Summit at CES, it declined to release subscriber numbers (Netflix reports fourth-quarter earnings on January 19, 2022). However, he said, “You should be able to see if I’m a concerned person.”
Gorman, who joined the streamer last year from Snap, where he was chief business officer, said expectations for Netflix’s ad levels would be at least revenue neutral, if not positive.
Netflix Basic With Ads launched in the US on November 3 for $6.99 per month (30% less than the regular Basic plan without ads, $9.99 per month). The ad-supported package is available in 12 countries: Australia, Brazil, Canada, France, Germany, Italy, Japan, Mexico, South Korea, Spain, UK and US
Preliminary data from research firm Antenna, released last month, indicates that Netflix’s ad-supported tier is taking off relatively slowly. Netflix disputed the accuracy of the antenna data.
Netflix Basic With Ads excludes some popular TV series and movies, including “House of Cards,” “New Girl” and “The Good Place,” for which Netflix currently does not have the rights to serve ads. (Netflix says 5%-10% of total titles are unavailable at the ad tier, depending on the market.) The “vast majority” of Netflix content is available at the ad tier, Gorman said.
Meanwhile, subscribers to the ad-supported plan, which serves about 4-5 minutes of content ads per hour, cannot download titles for offline viewing. The service is limited to a single 720p HD stream at a time (as is the case with Netflix Basic without ads).
Joining Netflix was “a tremendous opportunity to reach consumers that advertisers haven’t been able to reach,” Gorman said. “It was kind of a no-brainer.” He has been with Netflix for nine weeks so far.
Netflix is sticking with traditional 15- and 30-second ads for now, but in the long term the company plans to expand ad formats to target audiences differently, Gorman said. For example, Netflix expects to introduce single-show sponsorships and target ads based on demographic data such as age and gender.
Netflix’s ad-supported service is serving ads through a partnership with Microsoft and its Xandr platform. Gorman said there is a “broad shift” in advertisers in the initial mix for the ad-supported tier, including consumer packaged goods, retail and luxury marketers.
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