Published - August 30, 2022 @ 12:24 PM (EET)
Streaming giant Netflix (NASDAQ:NFLX) refuted recent claims of pricing estimates by Bloomberg, which suggested the new ad-supported streaming tier will have a monthly cost of $7 to $9 as it competes with Walt Disney.
While Netflix hopes to increase its subscriber base with lower rates as inflation squeezes customers' pockets and competition among rivals increases, the company said it was still holding internal discussions on the plan's pricing that will roll out to some markets by the end of 2022.
A Netflix representative told the New York Post,
"We are still in the early days of deciding how to launch a lower-priced, ad-supported tier, and no decisions have been made."
The new advertising tier will feature commercials of about four minutes per hour before and during programs, but not after, said the Bloomberg report.
WHY IT MATTERS
In contrast to Netflix's secrecy about the pricing of the ad-supported tier, Walt Disney (NYSE:DIS) has telegraphed its plan in advance. Disney+ ad-based Basic tier is priced at $7.99 per month, replacing the former monthly cost, and will launch on December 8.
Thus, expectations could be high for Netflix's ad-supported plan to boost its subscriber total and advertisements, with pricing of plans remaining a key item to watch in the highly competitive streaming market.
NOW WHAT
How both companies are rolling out their similarly pitched ad-tiers may be telling for investors considering whether Netflix or Walt Disney is the better buy.
Turning to Netflix, wiping $55 billion off of its value in April as its stock crashed by 35.1%, the streaming giant has had a rough year so far.
Yet, despite the defeat and reporting a loss of 200,000 and 970,000 subscribers in its first and second quarter, respectively, Netflix is still the top dog when it comes to streaming hours.
According to market research firm Nielsen Holdings, Netflix accounted for 8% of total US TV viewing time in July, the most of any streaming service provider.
Looking at the bigger picture, though ad-based streaming might not solve all of Netflix's current problems, the company still has a huge growth runway ahead, especially in international markets.
