Netflix estimates the ad-supported tier will reach 40 million viewers by the end of 2023

Executives of Netflix and its advertising partner, Microsoft corporate

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have been meeting with ad buyers over the past few weeks, looking to strike deals ahead of the planned launch later this year.

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In preliminary projections, Netflix told advertising executives it expects to have 4.4 million unique viewers worldwide at the end of the year, with 1.1 million coming from the United States. The company estimated it will grow to over 40 million unique viewers by the third quarter of 2023, with 13.3 million from the U.S.

Netflix’s projections for advertisers covered a dozen launch markets, including Brazil, Mexico, Japan, UK, France, Germany, Korea, Spain, Italy, Australia and Canada.

The company’s shared metric, “expected unique viewers”, should be higher than the number of subscribers for the ad-supported Netflix plan, since more than one person in a subscriber household will likely be able to watch the service.

“We are still in the early stages of deciding how to launch a more affordable, ad-supported tier and no decision has been made,” a Netflix spokesperson said in a statement.

The streaming company continues to assess the potential demand for the ad-supported plan, and its forecasts for subscriptions and viewers may change over time, according to people familiar with the matter.

Netflix, with 220 million subscribers, is betting that a low-cost, ad-supported plan could attract new users and increase revenue as the company faces increased competition and a maturing U.S. market.

The streaming giant lost nearly a million subscribers in the June quarter. It joins rivals like HBO Max and Disney + who have or are planning to launch ad-supported services.

Netflix’s foray into advertising is a major reversal for a company that has long claimed it would remain ad-free.

Netflix said in a July letter to shareholders that the new ad-supported option would likely begin in early 2023, but told some ad buyers it would launch on November 1. The company is looking to charge brands premium prices for advertising on its service, the Wall Street Journal previously reported.

Audience projections were distributed to some advertising buying companies, so they could advise their advertising customers on the expected reach of the new service, a factor in determining how much to spend.

Netflix is ​​betting that an ad-supported low-cost plan could attract new users to its content, including the survival drama “Squid Game”.


Photo:

Noh Juhan / Associated Press

The initial forecast for unique viewers, around 40 million in about a year, is small compared to Netflix’s huge customer base, but it would put the company on the map as a significant destination for online video ads. The pace of growth of Netflix’s service will depend, in part, on its price.

Demand from advertisers to participate in the launch is expected to be solid, some ad buyers said. Netflix has been off-limits to advertisers for years and has the largest audience in the streaming industry.

Some ad buyers have said they are dissatisfied with some aspects of Netflix’s planned service, including the fact that there should only be a limited ability to choose where to show ads.

Additionally, Netflix does not initially expect an independent company to provide metrics or verification that advertisers are getting the exposure they paid for.

Write to Suzanne Vranica to [email protected] and Sarah Krouse to [email protected]

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