Netflix, a global leading streaming platform, on Thursday launched a new subscription package in an effort to expand revenue generation.
Subscribers in the United Kingdom, the United States and other ten countries can now opt out for a lower subscription package with four to five ads per hour.
The package called Basic With Ads is similar to the ad-backed HBO Max version from Warner Bros. but lower in subscription fee by $3 and $1 less than about to be launched Disney+ with commercials.
A breakdown of the new ad-backed subscription package showed Netflix will charge Basic subscribers in the United States with ads $6.99 a month, instead of $9.99. In the United Kingdom, Basic with ads dropped to £4.99, down from £6.99.
In Canada and Australia, the streaming platform planned to lower basic subscriptions to 5.99 CAD/month and AU$6.99/month from 9.99 CAD/month and AU$10.99/month, respectively.
According to Bloomberg, Netflix had previously refused advert placement on its platform and pushed its brand as a commercial-free cable alternative. However, with subscriptions stalling in the last two years, the company is forced to explore revenue-generating alternatives.
In the briefing that followed the announcement, the company claimed it has sold out most of its ad inventory for Basic With Ads. It is however unclear, the number of subscribers that would forego a small portion of their subscription fee for higher-internet data and be willing to spend more time watching Netflix movies.
“We’re confident that with Netflix starting at $6.99 a month, we now have a price and plan for every fan,” Chief Operating Officer Greg Peters said in a company statement. “While it’s still very early days, we’re pleased with the interest from both consumers and the advertising community.”
Netflix shares jumped $10.77 or 4.79% to $231.48 a share immediately after the package was announced. The shares have been down by $367.40 or 61.50% from the year to date before it pared losses slightly after the news.
Netflix has partnered DoubleVerify and Integral Ad Science to help measure viewability and traffic validity, and also to ensure that the same ads do not show too often.
Ads will run from 15 to 30 seconds each, before and during TV shows and films, Netflix said. The package is optional and would be rolled out globally on November 11, 2022.