An ad-supported plan coming later this year from streaming platform Netflix Inc NFLX could add additional subscribers and revenue. Here’s a look at just how many subscribers Netflix thinks it can add with its new plan.
What Happened: Netflix estimated its ad-supported streaming plan can add 40 million unique viewers by the third quarter of 2023. The estimates, reported by the Wall Street Journal (WSJ), came as the company met with ad buyers.
Netflix saw hitting 4.4 million ad-supported unique viewers by the end of 2022 globally, including 1.1 million U.S. unique viewers. Of the 40 million unique viewers estimated for the third quarter of 2023, 13.3 million are expected to be from the U.S.
The company believes unique viewers to be higher than the number of subscribers due to more than one person in each household watching content.
“We are still in the early days of deciding how to launch a lower priced, ad-supported tier and no decisions have been made,” a Netflix spokeswoman told WSJ.
Netflix has not announced a price for the new ad-supported plan and recently rejected a rumor of a pricing level of $7 to $9 per month, as reported by Bloomberg.
Why It’s Important: Netflix partnered with Microsoft Corporation MSFT earlier this year to help with its advertising sales.
Netflix is trying to lock in partners on advertisements in more tham 12 countries it will initially launch in.
Netflix will limit the times it shows ads and will not air advertisements during certain original movies and kids’ content.
It was reported earlier this month that Netflix seeks big prices for its advertisements. A report from WSJ said Netflix sought a rate of $65 CPM, or $65 per 1,000 ad units viewed. Over time, Netflix saw the CPM rising to $80.
The ad-supported prices asked for by Netflix are similar to what media companies charge for Super Bowl commercials.
Netflix is also said to be seeking a $10 million minimum commitment from ad agencies and a one-year commitment from advertisers.
The launch of an ad-supported plan by Netflix comes as rival Disney+, owned by Walt Disney Co DIS, is launching an ad-supported plan in December. The move by Netflix also came after years of saying it wasn’t considering an ad-supported pricing tier.
Netflix reported its first loss of subscribers in more than 10 years with its first quarter financial results earlier this year.
The streaming giant ended the most recent quarter with 220.67 million subscribers.
NFLX Price Action: Netflix shares closed up 2.75% to $224.12 on Wednesday versus a 52-week trading range of $162.71 to $700.99.