What was once believed unthinkable is now a reality: Netflix with ads is here.
The streaming giant unveiled “Basic with Ads,” its much anticipated ad-supported subscription plan, on Thursday. The new tier will cost $6.99 a month in the US and be available Nov. 3 in the US, Canada, Australia, Brazil, France, Italy, Germany, Japan, Korea, Mexico, Spain and the UK.
The company said that “current plans and members will not be impacted” and that “Basic with Ads complements our existing ad-free Basic, Standard and Premium plans.”
The new option will feature much of what’s available with Netflix’s current $9.99 a month Basic plan, but will include an average of four to five minutes of commercials per hour.
Those ads will be 15 or 30 seconds in length and will play before and during TV series and movies.
Netflix (NFLX) noted that it will offer broad targeting capabilities by country and genre to help “advertisers reach the right audience — and ensure our ads are more relevant for consumers.”
“Advertisers will also be able to prevent their ads from appearing on content that might be inconsistent with their brand (e.g. sex, nudity or graphic violence),” Netflix said.
The company said that it is working with ratings tracker Nielsen in the US in 2023 “to enable advertisers to understand how Netflix can reach their target audience.”
“While it’s still very early days, we’re pleased with the interest from both consumers and the advertising community — and couldn’t be more excited about what’s ahead,” Netflix said. “As we learn from and improve the experience, we expect to launch in more countries over time.”
The debut of the ad-supported subscription plan is a momentous moment in Netflix 25-year history.
CEO Reed Hastings said in April that the company was open to adding commercials to the service, sending shock waves through the media and advertising industries as Hastings had for years been adamant about not putting ads on the platform.
“We … are advertising free,” Netflix said in a letter to shareholders in 2019. “That remains a deep part of our brand proposition.”
But after a nightmarish 2022, the platform can no longer stick to that approach.
In April, Netflix disclosed that it lost subscribers for the first time in more than a decade. Following that news, the stock tumbled, and the company lost billions in market cap, hundreds of employees were laid off and doubts ran rampant about the platform’s future, raising questions about the viability of the entire streaming marketplace.
In July, Netflix announced that it will partner with Microsoft (MSFT) to enhance sales and technology for this new subscription plan.
Ultimately, Netflix needs more revenue and ads is one way to achieve that. This doesn’t mean all subscribers will have to watch commercials since existing plans will stay ad-free, but there will now be a choice between a cheaper ad-supported plan and a premium one.
Ultimately, the Netflix of the future is bound to look different than the Netflix users have come to know.