Next month, Netflix will launch the first iteration of its ad-supported video streaming service, allowing frugal fans the chance to watch the majority of its series at a significant discount in exchange for putting up with interruptions from advertising.
The service will launch on November 3 as Netflix attempts to stop a decline in membership.
It will cost US$7 (NZ$12. 35) per month in the US, which is 55% less expensive than Netflix’s most popular US$15.50 (NZ$27.35) a month (ad-free) plan.
According to Greg Peters, Netflix’s chief operations officer, the company’s ad-supported option will also soon be available in Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, and the UK.
In addition to having to endure four to five minutes of advertisements for every hour of viewing, Netflix members who choose the less expensive option won’t be able to download TV episodes and movies to watch when their devices are offline.
Peters added that due to licencing constraints, a “small” portion of the programming that is now available on the commercial-free service won’t be available on the ad-supported version.
Netflix’s 15-year-old streaming service has until now been commercial-free, but the Los Gatos, California, company decided to head in a new direction six months ago after reporting its first loss in subscribers in more than a decade.
Customer loss exacerbated a painful stock price slide that over the past 11 months has destroyed shareholder capital of more than US$200 billion (NZ$353 billion). Even while the shares increased following today’s news, they have still lost approximately two-thirds of their value since peaking in November of last year, when the streaming service was still expanding.
Through the first half of this year, Netflix lost 1. 2 million subscribers, leaving it with nearly 221 million.
In July, management forecast that it would get back around one million of those subscribers over the summer. On Tuesday, the figures for the months of July through September are expected to be released.
Netflix is betting the low-priced option with ads will be particularly popular at a time when persistently high inflation is pressuring millions of households to curb their spending, particularly on discretionary items such as video streaming.
As a result of increased competition from companies like Amazon, Apple, and Walt Disney Co., which is also getting ready to launch an ad-supported version of its service soon, the streaming industry has also grown more cluttered.
Netflix charges a monthly fee for its new US ad-supported service.
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