Rejoice, streamers! Netflix has just announced its rollout of a lower-cost subscription plan today (November 3). The streaming giant announced on its official Instagram their “Basic with ads” plan, a lower-priced ad-supported plan starting at $6.99 a month.
Per Netflix, the difference in the ad-based plan is: video quality up to 720p/HD (now for both the Basic with Ads and Basic plans); there will bee an average of 4 to 5 minutes of ads per hour. It’s also worth noting that there are a limited number of movies and TV shows that won’t be available due to licensing restrictions (they say that they’re working on that). Also, if you have the ad-based plan, you won’t be able to download titles.
As we’ve previously reported, Netflix co-CEO Reed Hastings revealed plans for this in the company’s quarterly earnings call back in April. Netflix COO Greg Peters said that advertising “is an exciting opportunity for us.”
“Those who have followed Netflix know that I have been against the complexity of advertising, and a big fan of the simplicity of subscription,” Hastings said. “But as much as I am a fan of that, I am a bigger fan of consumer choice. And allowing consumers who would like to have a lower price, and are advertising-tolerant, get what they want, makes a lot of sense.”
Hastings said at the time that competitors like Hulu, Disney and HBO embracing lower-priced subscriptions with ads played a role in changing the company’s mind. “We don’t have any doubt that it works,” Hastings said, adding that it will be a plan similar to Hulu’s. Hastings also said that when Netflix launches its ad-backed tier, it won’t track data, which some of its streaming competitors do. “In terms of the profit potential, definitely the online ad market has advanced, and now you don’t have to incorporate all the information about people that you used to,” Hastings said. “We can stay out of that, and really be focused on our members, creating that great experience.”
Netflix’s decision to finally embrace advertising comes after their long resistance to the plan since its beginning, but with the streamer’s subscriber growth slowing and now declining, the pressure to bring new users has become too great to ignore with their rollout of ad-based plans just six months after their initial announcement.