New York (CNN Business) In 2019 Netflix said in a letter to shareholders, “We… are ad-free,” adding that ad-free is a “deep part of our brand promise.”
That changed on Thursday when the streaming market leader launched.Simply with advertisingthe platform’s much-anticipated ad-supported subscription.
The new tier will cost $6.99 per month in the US, where it’s available now. It will also be launched in Canada, Australia, Brazil, France, Italy, Germany, Japan, Korea, Mexico, Spain and the United Kingdom at different prices.
The company has called that “current plans and members are unaffected” and that “‘Basic with Ads’ complements our existing ad-free Basic, Standard, and Premium plans.”
The new tier will include most of what’s available with Netflix’s current $9.99-per-month basic plan. However, the Basic with Ads option averages four to five minutes of commercials per hour. These commercials are 15 or 30 seconds long and play before and during TV series and movies.
While most current subscribers won’t notice any major changes — unless they switch to the new plan, of course — Netflix’s commercial launch is one of the most defining moments in the company’s 25-year history.
CEO Reed Hastings sent shockwaves through Hollywood and Madison Avenue April when he said the streaming giant is open to advertising. Hastings had insisted for years not to run ads on the platform.
But the company can no longer stick to this strategy. Netflix (NFLX) had a terrible year. The platforms lost subscribers for the first time in more than a decade and his stocks plummeted. Netflix reported Last month it said it was growing again, but the company needs to show investors it can generate revenue even as subscriber growth stagnates.
“As we have discussed over the past few quarters, improving our pricing strategy is a key near-term focus,” the company said wrote last month, adding that the “reaction from advertisers so far has been extremely positive.”
Netflix in July announced with whom it will work Microsoft (MSFT) to improve distribution and technology for the new plan.
“We believe that more choice, particularly for more budget-conscious consumers, will translate to significant revenue and operating profit increases over time,” the company said last month. “However, it is very early days and as we continue to keep our existing plans ad-free, it will take some time to build up our membership base and associated advertising revenue.”