Netflix Inc (NASDAQ:NFLX) has said it will introduce a streaming plan with advertising in November, a move designed to attract new subscribers after the company lost customers in the first half of this year.
The cost for the new service in the US will be $6.99 per month, $3 less than Netflix's lowest-priced tier without commercials. In the UK, the new monthly package will be £4.99, against the company's cheapest existing ad-free package of £6.99 a month.
The new option will roll out in 12 countries over 10 days, beginning in Canada and Mexico on November 1, and in the US, UK, Brazil, France, Italy, Germany, Australia, Korea and Japan on November 3. Spain will follow a week later on November 10.
Subscribers to the plan will see roughly four to five minutes of advertising per hour, Netflix said. Newly released films will have limited advertising to preserve the cinematic experience.
READ: Netflix expects ad-supported tier to get 40 million viewers by 2023 - report
About 5% to 10% of Netflix's programming will not be available on the ad-supported alternative because of licensing restrictions, Netflix chief operating officer Greg Peters told a press conference, Reuters reported. Viewers will also only be able to stream Netflix on one screen at a time and there will also be no ability to download titles.
Peters declined to estimate how many customers would sign up for the ad-supported plan or how much additional revenue Netflix might generate, Reuters added. The company will provide forecasts for the fourth quarter when it releases earnings next Tuesday.
Other streaming services including Walt Disney Co's Hulu and Disney+ and Warner Bros Discovery's HBO Max already have, or plan to offer, ad-supported options that cost less. Those services charge between $8 and $10 per month for plans with commercials.
Netflix, known for hits such as 'Stranger Things' and 'Squid Game', reported 220.7 million paying subscribers as of June 2022, down nearly 1.2 million from the start of the year. The company projected it would add 1 million customers in the third quarter.
Reuters reported that Jeremi Gorman, Netflix’s president of worldwide advertising, said the company nearly sold out its advertising inventory for the launch of the new service, attracting interest from automakers, consumer packaged goods companies and luxury brands.
Advertisers can target viewers by country or genre, or run commercials on the service’s top 10 shows. Brands also can exclude ads from content featuring graphic violence, sex or nudity, Gorman said. Netflix also is introducing third-party verification to confirm ad impressions and traffic.
Ratings agency Nielsen will also provide audience measurement, starting next year, the company said.
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