Netflix announced Thursday that its new ad-supported offering will cost $6.99 in the U.S. and will launch November 3.
The company's Basic with Ads plan — cheaper than its $9.99
Basic plan — will include an average of four to five minutes of ads per hour.
Video quality will range up to 720p/HD, which will now be the range for the
Basic plan as well.
Users will not be able to download titles and some titles
won't be available due to country licensing restrictions. Advertisers will also
be able to block ads from appearing on content that might be inconsistent with
their brand, like sex or violence, the company said.
"In short, Basic with Ads is everything people love
about Netflix, at a lower price, with a few ads in-between," the company
said in a release.
At 221 million subscribers globally, Netflix remains the
largest worldwide streaming service. But Netflix shares have lost 62% of their
value in 2022 amid questions about the company's ability to keep growing its
user base, with the company losing subscribers in the first two quarters of the
year.
Netflix finds itself in stiff competition with other
streaming platforms like Disney+, which is launching its own ad tier in
December at $7.99 per month; and HBO Max, whose ad tier costs $9.99 per month.
In June, Netflix laid off approximately 300 staffers as it
looked to reduce costs amid stagnating growth. In its earnings announced in
July, Netflix said growing revenues was a "big challenge." The
streaming service will announce its third quarter earnings after the market
closes Tuesday, Oct. 18.
Shares were up as much as 4% in Thursday trading.
Netflix also plans to roll out a paid family offering next
year that will coincide with a crackdown on password sharing. Netflix estimates
that 100 million households worldwide are using shared passwords — with 30
million of those in North America. The company said the unauthorized sharing makes
it more difficult to grow membership and revenues.
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