Netflix says it would launch a cheaper, ad-supported plan at $6.99 a month starting on Nov. 3 in the U.S. Netflix will still offer ad-free subscriptions, but for people seeking a discount, an average of four to five minutes of ads will be spread out before and during their favorite programs each hour.
The L-A Times report the company said a limited number of shows and movies won’t be available on its Basic with Ads plan because of licensing restrictions, and customers won’t have the ability to download programs.
The push into advertising comes years after Netflix resisted putting commercials on its programs. But as the company faced increasing competition from rivals like HBO Max that offered lower-cost, ad-supported subscriptions to customers, some analysts said it was inevitable that Netflix would do the same.
The company — which remains the dominant subscription streaming service with nearly 221 million customers worldwide — is under pressure by investors to continue to grow its business. The pandemic saw unprecedented sign-ups for streaming, but since then, Netflix has struggled.
Netflix lost subscribers in two consecutive quarters and laid off hundreds of workers earlier this year to cut costs.
By offering ads, Netflix may be able to reach people who aren’t subscribers. Nine out of 10 adults who don’t have Netflix watch other ad-supported streaming content, according to a recent survey of 2,500 U.S. adults by Samba TV and Harris X.
Netflix monthly ad-free plans range from $9.99 to $19.99, two of which are seen as the most expensive compared to any popular U.S. streaming service. For example, ad-free HBO Max and Hulu is priced at $14.99 a month.
Netflix will debut its ad-supported plan before Disney+, which will launch an $8 monthly ad-supported plan on Dec. 8. At that time, the cost of an ad-free Disney+ plan will go up to $11 a month.
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