After months of speculation about whether the streaming service would allow advertisements in order to regain its millions of lost subscribers at a lower rate, Netflix has announced a new, cheaper subscription that comes with ads.
- The new subscription plan is targeted at budget conscious consumers. At $7 a month, the subscription plan is cheaper than the previous basic plan that starts at $10.
- Customers can start the new basic plan with ads beginning November 3.
- Ads will play for four to five minutes per hour of viewing time. The plan will also have a lower video quality than more costly subscription plans, and some shows will be limited as Netflix does not have rights to play them with commercials.
Why it’s news
The struggling streaming service has debated whether or not to include advertisements for some time. Including a subscription option with ads seems to be having the desired effect as company officials have reported hundreds of advertisers have signed up.
The new category called Basic With Ads allows users to view Netflix shows on one device at a time and does not allow users to download shows and movies for offline viewing. The next tier service Basic permits viewing on one device at a time and downloads on one device. Starting in November, this plan will also offer HD viewing.
Next level subscription plans allow users to view on multiple devices at once, view shows at higher video quality, and download shows on multiple devices.
Basic With Ads undercuts pricing from Netflix’s rivals. The new subscription category is $3 less than HBO Max and $1 less than Disney+’s upcoming ad subscription category.
Backing up a bit
Up until last year, Netflix was staunchly opposed to advertising on its platform. Now, it’s charging ahead into the advertising realm.
Netflix has been steadily losing subscribers and is now facing tougher competition from streaming services like Hulu, Disney+, and Apple TV.
Shifting to advertising on the platform could be necessary to create needed revenue for the streaming service.
In June, Netflix reported that it had 220.7 million paying subscribers, a decrease of 1.2 million from the beginning of the year.