Netflix to launch cheaper ad-supported streaming tier in UK from November

Netflix is launching a new cheaper streaming tier in the UK from November that will feature adverts.

The streaming giant described the move as a “pivotal moment” in the entertainment industry as more people switch to on-demand internet-based entertainment.

The new basic tier with adverts will launch in the UK on 3 November and will cost £4.99 per month, Netflix chief operating officer Greg Peters has confirmed.

At launch, adverts will be 15 or 30 seconds in length and will play before and during series and films, with an average of four to five minutes of adverts per hour. A limited number of films and TV series will not be available due to licensing restrictions, but Netflix has said it is working on reducing this number.

There will also be no ability to download titles and the video quality will range up to 720p/HD on the new tier.

Netflix said that customers will still be able to personalise their viewing experience and watch content on a range of TV and mobile devices, as they can on their current plans.

The new tier will first be available in 12 countries, including Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, the UK and the US.

Mr Peters said: “The timing is great because we really are at this pivotal moment in the entertainment industry and evolution of that industry.

“We’ve seen this gradual switch from linear to on-demand internet-based entertainment, but now that switch is happening at ever-increasing speed, to the point where now streaming has surpassed both broadcast and cable for total TV time in the United States.”

Mr Peters explained that a similar transition is happening across the world, including the UK, adding: “We at Netflix have a huge opportunity ahead to grow our viewing and to attract more subscribers and part of that is having a wide range of price and plan options for different viewer needs.”

Netflix picked Microsoft to help deliver the commercials in the new tier and pledged to minimise the intrusions into customers’ personal privacy that often accompany digital adverts.

The streamer has said it will offer broad targeting capabilities initially by country and genre to help advertisers reach the right audience and ensure their adverts are more relevant for consumers. It will later collect data on gender and age when new customers sign up to help show more relevant adverts over time.

Advertisers will also be able to prevent their adverts from appearing on content that might be inconsistent with their brand, such as titles featuring sex, nudity or graphic violence.

During the press launch for the new tier, Netflix’s president of worldwide advertising Jeremi Gorman confirmed: “The privacy of our members is critically important to us and this is why Netflix data is only going to be used to support advertising experiences on Netflix and will not be used to build profiles or ad targeting elsewhere.”

Asked how the streamer plans to ensure the adverts will not disrupt the viewing experience, Mr Peters said Netflix’s internal content tagging teams will be used to find the natural break points within TV shows and films so that they can “deliver the ads in the least obtrusive point”.

In regards to films, he said there will be a “pre-roll ad experience” for the films recently added to “try and preserve that cinematic model”, while films that have been on Netflix for a while will feature adverts both before and during the film, but the breaks will be less frequent.

Mr Peters also said that Netflix does not “heavily anchor” its price plans off other streaming giants like Disney+ and Hulu, but instead tries to provide a “unique entertainment offering that you can only see on Netflix” and prices are based around this.

Netflix said it would abandon its resistance to adverts earlier in the year after admitting it had lost subscribers amid stiffer competition and rising inflation that has put pressure on household budgets, prompting management to realise the time has come for a less expensive option.

Earlier this year, the streamer increased the price of its basic and standard plan by £1 a month to £6.99 and £10.99 respectively, while the premium tier will go up by £2 to £15.99.

The company has also started to clamp down on customers sharing their accounts with other households. Netflix started a crackdown in Chile, Costa Rica and Peru on people sharing passwords and is considering expanding the scheme.