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Netflix is rolling out the Basic with Ads plan after recording a reduction in subscribers for the first time in over a decade.
Subscription streaming service and production company Netflix (NASDAQ: NFLX) has announced a new service tagged “Basic with Ads” in the US. The company revealed that it would begin to charge $6.99 monthly for its new ad-supported service, which will be available as of the 3rd of November. After unveiling the new advertising-supported tier, its subscribers will begin watching 15 to 30 seconds long commercials before and during their Netflix content.
Netflix Announces Basic with Ads Service
In total, Netflix Basic with Ads subscribers will deal with four to five minutes of advertisement every hour. Additionally, users will not have access to download movies and TV series to watch offline. That means they could only stream with commercials popping up at intervals. Due to licensing restrictions, some TV series and movies will not be available at first for subscribers of Netflix Basic with Ads.
While the video resolution for the standard plans is 1080p, Netflix Basic with Ads will be 720p. On the 1st of November, the service will be available in Canada and Mexico. After that, users in Australia, Germany, Korea, France, Japan, Brazil, Italy, the UK, and the US will have access on the 3d of November. The ads-inclusive tier will not be available in Spain until the 10th of November.
Meanwhile, companies can restrict ads from appearing on the content they perceive as unsuitable or unsavory. Information data and measurement firm Nielsen (NYSE: NLSN) will use Digital Ad Ratings in the US from early 2023 to help advertisers understand its reach. Also, Netflix is collaborating with Microsoft (NASDAQ: MSFT) on the new Basic with Ads service.
Netflix is rolling out the Basic with Ads plan after recording a reduction in subscribers for the first time in over a decade. The media company lost up to 200,000 subscribers in the first quarter of the year. As a matter of fact, the largest worldwide streaming service is expecting to onboard just 1 million customers in Q3. Netflix is available worldwide, amounting to around 221 million global subscribers. The company is finally rolling out its first less-expensive plan that includes ads after rejecting the idea for years.
Netflix’s CEO Once Disregarded Ads-Inclusive Concept
Netflix chairman and CEO Reed Hastings once disregarded the concept of ad-supported service. In his words, “long term, there’s not easy money there.” Its competitor Disney+ is also releasing an ad tier in December at $7.99 per month.
While Netflix has lost nearly 63% over the past year, Wall Street analyst Matthew Harrigan rates its stock a Sell. Currently, at $232, he predicts the company will drop to $157 per share. According to Harrigan, the economic environment is affecting the stock.
“We remain cautious on Netflix as medium-term risk appear geared to the downside. Micro timing for a new advertising service is also not favorable,” wrote he.