Netflix Launches New Ads Tier After Challenging Year

(Photo by Patrick T. FALLON / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images)

Matthew Holloway Contributor
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Netflix launched a new ad-supported subscription tier to its platform on Thursday.

Netflix is calling the new level of service “Basic with Ads” and it will cost $6.99 per month, according to a press release on the company’s website. The move represents a new direction for the streaming market leader, providing an alternative to churning out cash-strapped subscribers and opening up a new line of revenue through advertising. (RELATED: Arab Countries Pressure Netflix To Remove Gay Content)

The new service offers “Video quality up to 720p/HD” for both “Basic with Ads and Basic plans” and an “average of 4 to 5 minutes of ads per hour,” according to the release. “We’re confident that with Netflix starting at $6.99 a month, we now have a price and plan for every fan.”

“Advertisers will be paying a high premium to advertise on Netflix — with uncertain results. The platform reportedly won’t have third-party measurement until at least early 2023,” Kevin Krim, president and CEO of EDO, a data, measurement and analytics firm, told MarketingDive.

“As American families juggle inflation and rising gas costs, ad-supported tiers give them more affordable access to highly popular and premium TV content,” Krim added. “But will Netflix bring in new price-sensitive subscribers or will current subscribers trade down? That’s the only real risk.”

Microsoft has partnered with Netflix to bring the Basic with Ads plan to life with the tech giant providing both technological and sales support for the venture, according to a release from Microsoft. “All ads served on Netflix will be exclusively available through the Microsoft platform,” President of Web Experiences at Microsoft Mikhail Parakhin wrote in the release.

“Microsoft has the proven ability to support all our advertising needs as we work together to build a new ad-supported offering. More importantly, Microsoft offered the flexibility to innovate over time on both the technology and sales side, as well as strong privacy protections for our members,” Netflix COO Greg Peters explained.

Netflix recently reversed a decline in subscriber numbers, reportedly adding approximately 2.4 million worldwide, according to The New York Times. This comes after Netflix lost 200,000 subscribes in the first quarter, followed by nearly 1 million in the second.

“After a challenging first half, we believe we’re on a path to re-accelerate growth,” Netflix said in its quarterly letter to shareholders, according to The New York Times. “The key is pleasing members.”
The rebound reportedly netted an increase in Netflix stock of about 10%, according to the outlet.