Launched in 9 Countries Including Korea to Improve Profitability
Cheaper Than Existing 9,500 Won Plan but Requires Watching 4-5 Minutes of Ads per Hour on Average
[Asia Economy Reporter Yoon Seul-gi] Online video service (OTT) Netflix has launched an ad-supported subscription plan in nine countries, including South Korea. Previously, Netflix aimed to provide ad-free video streaming services, but it changed its policy to improve profitability. The newly launched plan costs 5,500 KRW per month in South Korea, which is 4,000 KRW cheaper than the previously cheapest plan (9,500 KRW per month).
On the 3rd (local time), Netflix introduced the ad-supported plan starting at 9 a.m. Pacific Time (1 a.m. Korean time on the 4th) in South Korea, the United States, Brazil, the United Kingdom, France, Germany, Italy, Japan, and Australia.
Named "Basic with ads," this plan includes advertisements within the content in exchange for a lower monthly fee. It is priced at 5,500 KRW per month in South Korea and $6.99 per month in the United States. This plan, initially introduced in 12 countries, was first applied in Canada and Mexico on the 1st, and will launch in Spain on the 10th.
For South Korean users, choosing this plan saves 4,000 KRW compared to the existing "Basic plan" (9,500 KRW per month), but requires watching an average of 4 to 5 minutes of ads per hour. Ads, lasting 15 or 30 seconds, are shown before and during content playback. Customers on the ad-supported plan can watch content in 720p/HD quality on laptops, TVs, smartphones, and tablets, just like those on the Basic plan.
However, there are some restrictions with the ad-supported plan. Customers who choose this plan cannot use the content download service, unlike other plans, and some content with licensing issues related to ad placement rights cannot be viewed immediately on the ad-supported plan.
According to The Wall Street Journal (WSJ), Netflix is currently negotiating with Disney, NBCUniversal, Sony Pictures, Warner Bros., and others to resolve these issues. The list of programs under license negotiations reportedly includes popular American dramas such as "Breaking Bad," "Reconstruction of a Crime," and "Grey's Anatomy," according to foreign media.
Netflix's introduction of the ad-supported plan is a measure to improve profitability amid worsening earnings. OTT competition in North America is intensifying, and with the COVID-19 endemic phase, new subscribers decreased by 600,000 in the first quarter?the first subscriber decline since Netflix's service launch in 2011, marking 11 years. In the second quarter, subscribers decreased by 970,000. Although the third quarter saw an increase of 2.41 million subscribers, the number of new subscribers in North America was only 100,000.
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