Netflix will present a new lower-priced plan with ads in November following a massive drop in subscriber count and experiencing growing competition from other streaming platforms.
At $6.99 a month, the Basic with Ads plan will have 15-to-30-second ads prior to and during the shows and films. Furthermore, it will have a smaller content selection because of licensing restrictions. As a result, on average, ads will pop up for a total of four to five minutes per hour.
The new plan will not provide users with the convenience of downloading content for offline use.
The announcement comes following the company’s suffering of a decrease in subscribers for the first time in over a decade this year, dropping at least 200,000 in this year’s first quarter. As a result, the company imposed redundancy on over 150 workers, dozens of contractors, and part-time employees in May.
While Netflix faces a significant loss in subscribers, steaming competitor Disney+ is gaining more subscribers – particularly in millions. Walt Disney Co. revealed in August that Disney+ drew 14.4. million subscribers in the quarter ending 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.
Basic with Ads: A Result of Competitor Pressure
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.