Netflix estimates its ad-supporter tier, set to debut as early as November, will reach 40 million global subscribers by the third quarter of 2023, according to the Wall Street Journal.
The news outlet reports the company expects 4.4 million unique viewers globally by the end of the year, with 1.1 million coming from the U.S. Those figures would increase to 40 million worldwide by the third quarter of 2023, with 13.3 million from the U.S.
But since more than one person in a paying household is likely to be able to watch the streaming platform, the figure the company supplied of “projected unique viewers” is anticipated to be larger than the number of subscribers for its ad-supported tier.
“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 said in a statement to the WSJ.
Netflix announced a global subscriber loss of nearly 1 million in the second quarter, dropping to 220.67 million total subscribers. However, the company looks to end that trend with its lower-priced tier, which is expected to debut in the $7-9 price range. Under the ad-support tier, users will be treated to four minutes of commercials per hour.
The streamer has already tapped Microsoft as its partner for the upcoming ad-supported tier and has been attempting to alter its programming deals with Hollywood studios, including Warner Bros., Universal and Sony Pictures Television, along with renegotiating contracts for acquired programming such as Breaking Bad and NCIS for its ad-supported tier.
The streamer is also reportedly eliminating offline viewing for subscribers in its new AVOD model.
For a business that has long declared its commitment to remaining ad-free, Netflix’s entry into advertising represents a significant U-turn.
In the streaming TV market, ad-supported tiers are becoming more popular since they give users a more affordable option in the face of rising content costs.
Ad-supported plans are already used by rival services to keep audiences, including Hulu, HBO Max, and Peacock. Additionally, Netflix’s ad-supported tier is a component of the streamer’s plan to discover a fresh source of revenue growth as it struggles with declining subscriber counts and increased competition from other media behemoths like Disney, Amazon and Warner Bros. Discovery.