Netflix has a new advertising-supported tier beginning Nov. 3 in the U.S., and it will cost $6.99 per month, said in a report by CNBC.
The New "Basic with Ads" Subscription
The "basic with advertisements" plan on Netflix does not allow users to download movies or TV shows and features an average of four to five minutes of commercials each hour. At launch, licensing issues will prevent access to a select number of shows and films.
The advertisements appearing before and during Netflix shows will be either 15 or 30 seconds long. Advertisers will no longer worry about seeing their products alongside anything they find offensive or inappropriate.
Nielsen's Digital Ad Ratings, the company's standard digital audience measurement, will be implemented in the U.S. beginning in 2023 to aid advertisers in understanding reach.
Related Article: Netflix Opens Internal Game Studio in Finland - Original Games with No Ads and No In-App Purchases
Company's Newest Move in Response to Lost Subscribers
After initially rejecting the idea, Netflix has decided to provide a cheaper service with commercials.
With subscriber growth slowing in recent quarters, the change was necessary. Netflix has seen a decline in subscribers in the first two quarters of this year, and the company anticipates adding only 1 million new consumers in the third quarter.
With over 221 million customers, the firm easily dominates the global streaming market.
Chief Operating Officer Greg Peters said that Netflix would release its third-quarter earnings and reveal subscription predictions for the advertising business after Tuesday's market closing.
The Netflix-Microsoft Partnership
For its ad-supported model, Netflix has teamed up with Microsoft. In a media conference call, the streaming service announced that hundreds of advertisers have committed to buying space before launch.
A Less Expensive Price Compared to Rivals
The ad-supported tier of Disney+ will debut in December at the same price as Hulu's ad-supported service, which will increase to $7.99 per month simultaneously. Meanwhile, the monthly cost of HBO Max with advertisements is $9.99.
In comparison, Netflix's monthly subscription fee of $6.99 is less expensive than all of those options.
According to Peters via CNBC, Netflix set the price of its service so that each client who moves to the ad-supported service from the ad-free basic plan will have a "neutral to positive" effect on the company's income. This was done in order to encourage customers to make the switch.
Additional Information
Instead of 1080p, the quality of Netflix's basic plan costs $15.49 per month, and the video resolution for the advertising tier will be 720p. The company's most basic plan, which does not include advertisements and costs $9.99 per month, also offers a resolution of 720p.
On Nov. 1, the advertising tier will first become accessible to users in Canada and Mexico. On Nov. 3, it will be made available in the U.S., Australia, Brazil, France, Germany, Italy, Japan, Korea, and the U.K. After that, Spain will make their debut on Nov. 10.
Related Article: Disney+ Announces Ad-Support Plan and Subscription Price Increase this December
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Written by Trisha Kae Andrada
