Netflix announces new ad-supported subscription service tier

Netflix has announced an ad-supported service that will launch on November 1st in the US and November 3rd in the UK. It will cost $6.99 in the US compared with the $9.99 current minimum subscription price and £4.99 versus £6.99 in the U.K. 4-5 minutes of advertising will be shown per hour. 

Significantly, ads will be “tailored” to user interest, which means that data will need to be shared with Netflix so that it can provide ads that are relevant to each end user. Netflix has stated it will ask subscribers to the ad-supported service a number of questions including age, gender, etc.

This announcement is highly significant as Netflix is now in direct competition with other online advertisers such as Google and Facebook and is an alternative distribution channel for tailored ads. 

When it comes to Ad dollars, Netflix may be a very attractive outlet for advertising content. It clearly hopes the proposition will improve its financial position – it was the worst performing stock in S&P 500 for the first half of 2022.  

Morgan Stanley estimates that Netflix could raise over $3 billion dollars annually from advertising by 2026.

For the consumer, any reduction in the price of content and services is hugely beneficial, especially in a cost of living crisis.

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