Netflix will introduce a new low-cost, ad-supported plan in November after a significant drop in subscribers and growing competition from other streaming platforms.
The $6.99/month Basic with Ads plan includes 15-30 second ads before and after shows and movies. Additionally, licensing restrictions limit your choice of content. As a result, ads are served for an average of 4-5 minutes per hour.
The new plan does not offer users the ability to download content for offline use.
The announcement comes after the company suffered its first subscriber decline in over a decade earlier this year, dropping at least 200,000 in the first quarter of this year. As a result, the company said in May that he imposed furloughs on more than 150 workers, dozens of contractors, and part-time workers.
Netflix is facing a significant decline in subscribers, but streaming competitor Disney+ has been gaining millions of subscribers in particular. Walt Disney Co. announced in August that Disney+ pulled 14.4 subscribers for the quarter ended June 30.
Netflix’s ad-free service was formerly “a deep part of our brand proposition,” per a letter to shareholders by the company in 2019.
“We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction,” the letter said.
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Basic with Ads Comes After Subscriber Decrease
However, as the pressure from streaming competitors grows and the subscriber count drops, Netflix Executive Reed Hastings stated in April that the streaming giant is considering lower-priced offerings with ads.
“Those who have followed Netflix know that I have been against the complexity of advertising and a big dan of the simplicity of subscription,” Hastings stated during the first-quarter-earnings call in April.
“But as much as I am a fan of that, I am a bigger fan of consumer choice – and allowing consumers who would like to have a lower price and are advertising tolerant to get what they want makes a lot of sense.”
Viewers are offered stream content in high-definition video quality of up to 720p on one supported device at a time under the Basic with Ads plan. But ads will not appear in any Netflix games.
Alongside the release of the lower-price plan, Netflix will improve its Basic plan, at $9.99 a month, from standard definition (480p) to HD.
The Basic with Ads plan will be accessible in 12 countries and will be released in the United States on November 3.
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