Netflix launched new subscription plan with ad support

A new form of subscription plan is now available for Netflix subscribers and potential customers, with ad support being the main feature of the new plan.

Said option is launched for the US customers at a price of $6.99 a month. The subscription plan is also to be launched in Great Britain, France, Germany, Italy, Spain, Canada and some other countries, with a price set at various levels depending on a country.

According to a statement made by the streaming service, the existing subscription plans won’t be changed, and the launched ‘Basic with Ads’ plan is going to accompany the company’s currently available plans with no add support. Basic, Standard and Premium plans are the mentioned add-free subscription plans the company has no intention to change.

The new form of Netflix subscription is similar to the company’s Basic plan for $9.99 a month, providing access to most of the content available with it, while the ‘Basic with Ads’ plan is cheaper and includes video ads. An average time of advertising content per hour is about four or five minutes, with most of the ads being short 15 or 30-second videos shown before movies and series, as well as during the watch. 

Launching of the ad-supported plan’s has become a significant event in the company’s history, even despite the fact that it won’t have any direct impact on the current customers of the service who don’t want to change their subscription plans.

Netflix’s plans of finally adding ads to its services were initially sounded in April by the company’s CEO Reed Hastings. For many market participants, this statement came as a shock, as the company was famous for its constant refuses to use commercials on its platform.

But in the current situation, the company is no longer able to hold to its old strategies. Netflix’s performance over the year turned out to be unsatisfactory — the number of users declined for the first time in more than ten years, while the company’s shares fell. Despite some growth in users number being registered later, Netflix still needs to prove its profitability for the investors, especially under the condition of stagnated number of users.

As it was stated by Netflix representatives, one of the most important goals of the company for the nearest future is improving its pricing strategy. This decision was made after long discussions over the last few quarters. The company has also noted that advertisers’ reactions remain positive.

Netflix additionally stated that, in their opinion, an extended choice of subscription options would eventually result in notable increasing of revenue and operating profit over time.