Netflix will unveil a new, cheaper plan with ads in November after a massive drop in subscribers and growing competition from multiple streaming services.
For $6.99 a month, the plan called Basic with Ads offers 15-30 second ads before and during shows and movies. Also, due to licensing restrictions, there will be a smaller selection of content. Correspondingly, ads are shown on average four to five minutes per hour.
The new plan does not offer users the ability to download content for offline use.
The announcement comes after the company experienced a decline in subscribers for the first time in more than a decade this year, with at least 200,000 down in the first quarter of this year. Subsequently, the company imposed redundancy on over 150 workers, dozens of contractors, and part-time employees in May.
As Netflix faces a considerable reduction in subscribers, streaming rival Disney+ is earning more subscribers, particarly in millions. In August, Walt Disney Co. revealed that Disney+ gained 14.4. million customers for the quarter concluded June 30.
Netflix’s ad-free offer was formerly “a deep part of our brand proposition,” a letter to shareholders by the company in 2019 stated.
“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,” according to the letter.
Strong Competition Led to Basic with Ads
But as pressure from streaming competitors mounts and subscriber numbers dwindle, Netflix executive Reed Hastings said in April that the streaming giant was looking at cheaper deals 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 explained on the April first-quarter-earnings call.
“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.”
Subscribers are provided to watch films and shows in high-definition video quality (up to 720p) on one device at a time with the Basic with Ads plan. However, 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.