Netflix Inc. will introduce an ad-supported plan on November 3, charging seven dollars per month for a subscription that the company bets will attract new budget-conscious users and accelerate growth, Bloomberg reports.
The cheaper streaming package will debut in the U.S. and 11 other countries, including Japan, France, and Brazil, Netflix announced on Thursday. It will include four to five minutes of ads per hour and offer lower video quality than the more expensive tiers. Some programs will not be available as the company does not have the rights to show them with ads.
Netflix has long positioned its streaming service as a commercial-free alternative to cable television and resisted calls to introduce advertising. But with subscriber growth stalling and shares also stagnating, the company is seeking a cheaper version of its ad-supported service to generate additional revenue.
In a briefing, company officials said they already have hundreds of advertisers and have sold out most of their inventory for the service called Basic with Ads.
The price gives Netflix a competitive product compared to similar offerings from newer rivals. It is $3 per month lower than the ad-supported version of HBO Max from Warner Bros. Discovery Inc., and $1 less than the upcoming Disney+ with ads.
The company’s current ad-free packages range from $10 per month for a plan that allows users to watch on one screen at a time to $20 per month for a high-definition service with up to four screens at once.
Netflix shares rose as much as 4.4 percent to $230.51 in New York following the announcement. They have fallen 62 percent this year and are heading for their first annual decline since 2014 after peaking above $700.
