Netflix will launch a cheaper plan with ads for $6.99 per month in November

Netflix will introduce a lower-priced, ad-supported plan in November after suffering a drop in subscribers and facing growing competition from other streaming providers.

At $6.99 per month, the Basic with Ads plan will include 15-30 second ads before and during shows and movies, and will have a smaller selection of content due to licensing restrictions. Ads will appear, on average, for a total of four to five minutes per hour.

Users of the new plan will not be able to download content for offline viewing.

The announcement comes after the company suffered a drop in subscribers this year for the first time in more than a decade, losing as many as 200,000 in the first quarter of this year. The streaming giant laid off at least 150 employees and dozens of contractors and part-time workers in May.

As Netflix struggles to keep its subscribers, streaming competitor Disney+ is pulling in millions of subscribers. The Walt Disney Co. announced in August that Disney+ added 14.4 million subscribers in the quarter ending June 30.

Netflix’s ad-free streaming service was once “a deep part of our brand proposition,” as the company stated in a letter to shareholders in 2019.

“We believe we will have a more valuable long-term business if we stay out of the competition for ad revenue and instead focus entirely on competing for viewer satisfaction,” the letter said.

But with mounting pressure from streaming competitors and falling subscribers, Netflix CEO Reed Hastings said in April that the company is open to lower-priced deals with ads.

“Those who have followed Netflix know that I have been against the complexity of advertising and am a big fan of the simplicity of subscription,” Hastings said on a first-quarter earnings call in April. “But as much of a fan of that as I am, I’m a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and tolerate advertising to get what they want makes a lot of sense.”

Viewers will be able to stream content in HD video quality (up to 720p) on one compatible device at a time on the Basic plan with ads. Ads will not appear in any Netflix games.

Along with the launch of the lowest priced plan, Netflix will be upgrading its Basic plan, at $9.99 per month, from standard definition (480p) to HD.

The Basic with Ads plan will be available in 12 countries and will roll out in the US on November 3.

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