Netflix Launches Ad-Supported Option At $6.99

In an effort to regain momentum and boost per-user revenues — at a time when consumers are increasingly pressured by price inflation — Netflix will debut an ad-supported subscription option on November 3, priced at $6.99 a month. 

It’s a move the company had long rejected, but is making out of desperation to rebuild its devastated market cap. Though Netflix stock rose 5.3% on the news, the shares are still down a whopping 67% from their 52-week high of $700.99.

After a decade of growth, this year the company posted subscriber losses in back-to-back quarters. The company has 221 subscribers worldwide, and previously said it hopes to add a paltry 1 million in the third quarter. We’ll find out on Tuesday Oct. 18.

According to the company’s Thursday announcement, the new tier, called “Basic With Ads,” will initially be available in a dozen countries: the United States, Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain and the UK.  

Those who opt for Basic With Ads can expect to an average of four to five minutes of advertisements per hour, both before and during the program. Each ad will be 15 or 30 seconds long. Netflix didn’t project how many viewing interruptions subscribers will experience per hour. 

Imagine watching your favourite character about to die on a Netflix show.. then a Grammarly ad pops up for 30 secs

— 6ixBuzzTV (@6ixbuzztv) October 14, 2022

“A limited number of movies and TV shows won’t be available due to licensing restrictions, which we’re working on,” the company said. 

With the addition of the new option, Netflix will offer four different subscription plans.    

Basic With Ads ($6.99): Watch on one device at a time; no downloading; HD
Basic ($9.99): Watch or downloading on one device at a time; HD starting in November  
Standard ($15.49): Watch or download on two devices at a time; HD
Premium ($19.99): Watch or download on four devices at a time; Ultra HD

For comparison, Disney+ costs $10.00 without ads and will have a $7.00 with-ads option in December. HBO Max is $14.99 without ads and $9.99 with ads. 

One producer of Netflix content says the change will alter everyone’s experience on the platform: 

One maybe non obvious impact is that this will change the way every story is broken at Netflix from now on as writers will have to build in hard act breaks. Even if you’re watching the non ad version the story can no longer be completely continuous. https://t.co/hJBBWDPVol

— David H. Steinberg (@DavidHSteinberg) October 13, 2022

To support tailored advertising, Basic With Ads users will have to provide something other subscribers don’t today: date of birth and gender. We’ll be curious to see how TikTok-inspired gender options notoriously woke Netflix will present.  

As of August, streaming accounted for a record-high 35% of all television usage, according to Nielsen — eclipsing once-mighty cable.

August 2022 TV viewing share for persons 2+ (via Nielsen)