Netflix sets November date for debut of ad-supported tier

The Netflix app is displayed alongside other streaming media services on the homepage of a Roku Streaming Stick. (Photo: Matthew Keys / Flickr Creative Commons)

Streaming service Netflix says it will roll out a cheaper subscription plan that is supported by advertisements on November 3.

The version, called Basic with Ads, is priced at $7 a month and will debut in 12 countries around the world, including the United States, Canada, Mexico, the United Kingdom, Australia, France, Germany and Italy.

Current subscribers can continue to use Netflix’s other three tiers of service, all of which are commercial-free. No price increases were announced for those packages.

Netflix says Basic with Ads will run around 4 to 5 minutes of commercials per hour of content. Microsoft is powering Netflix’s ad platform, the companies announced earlier this year. The tier will include around 90 percent of movies and TV shows that are found in the more-expensive plans; Netflix said the limited catalog is due to rights issues, which the company is working on.

“Basic with Ads is everything people love about Netflix, at a lower price, with a few ads in-between,” a Netflix spokesperson said on Thursday.

As part of the rollout, Netflix says it will increase the resolution of video streams for customers on its two cheapest plans. Currently, Basic subscribers are limited to standard definition video capped at 480i resolution; starting next month, Basic and Basic with Ads customers will have access to 720p resolution, which is considered high definition.

Customers who want full high definition video at 1080p resolution can pay $15.50 a month for the Standard plan, which also allows streamers to watch Netflix on two devices at one time. Netflix also offers a Premium plan that unlocks ultra high-definition (UHD/4K) video streams and allows Netflix to be run on four devices at once for $20 a month.

Netflix has been under pressure to offer cheaper ways for streamers to access their content after the company reported mounting subscriber losses for its two most-recent financial quarters. Executives blamed subscriber losses on an increasing trend of customers sharing their passwords with freeloading streamers, but media analysts say Netflix’s outsized spending and rising subscription fees have driven customers to cheaper services like Amazon Prime Video, HBO Max and Disney Plus.

The ad-supported version of Netflix could be a hard sell on subscribers from the outset, with around 70 percent of current customers saying they’ll remain on the commercial-free tiers for the time being, according to a Whip Media survey released in August. Over time, the ad-supported package is likely to grow on people; analytics firm Omdia claims 60 percent of Netflix subscribers will stream content with ads by 2026.

For all its woes, Netflix is still one of the most-dominant streaming services in the world, with the company reporting more than 220 million paying customers as of mid-July. The company is expected to update this figure as part of its next quarterly earnings report, which is due in the next few weeks.