California’s SAN RAMON (AP) — 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 Nov. 3 and will be supported by advertisements as Netflix attempts to stem a decline in customers. It will cost $7 per month in the United States, which is a 55% discount from Netflix’s most popular $15.50 per month ad-free plan.
Greg Peters, the company’s chief operations officer, said on Thursday that Netflix’s ad-supported option would also be launching in Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, and the U.K.
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.
The painful stock price decrease that has destroyed more than $200 billion in shareholder capital over the past 11 months was made worse by the erosion of customers. The shares increased after Thursday’s revelation, but since they peaked in November of last year, when the streaming service was still expanding, they have still lost approximately two-thirds of their value.
With approximately 221 million customers after the first half of this year, Netflix had a 1. 2 million subscriber loss.
In July, management forecast that it would get back around 1 million of those subscribers over the summer. On Tuesday, the figures for the months of July through September are expected to be released.
When millions of households are under pressure to reduce their spending, especially on discretionary products like video streaming, due to consistently high inflation, Netflix is wagering that the inexpensive option with advertisements will be especially popular.
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 $7 per month for its advertisement-supported service.
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