Netflix has recognised the worrying economic outlook, and will soon offer consumers a more budget friendly subscription plan.

Netflix on Thursday announced that from 3 November, it will launch a subscription plan called “Basic with Adverts” – that in the UK will cost £4.99 per month ($6.99 in the US).

The move comes as Netflix seeks to arrest a decline in subscribers numbers, as well as increased streaming competition from the likes of Disney, Apple, Amazon and HBO.

Basic with Adverts

Netflix said that its budget friendly plan will be available in 12 countries, namely Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, the UK and the US.

The arrival of the new “basic with adverts” plan will run alongside Netflix’s existing subscription plans, but the budget offering will stream video quality up to 720p/HD.

Netflix said that the “basic with adverts”plan will feature on average adverts of 4 to 5 minutes per hour.

At launch, adverts will be 15 or 30 seconds in length which will play before and during series and films.

It also said that a limited number of films and TV series won’t be available (thought to be around 5 to 10 percent of Netflix’s programming) with this budget plan, due to licensing restrictions, which it said it was working on.

The budget option will also offer no ability to download titles, to view offline.

In July Netflix selected Microsoft as its global advertising technology and sales partner.

The development with Microsoft was interesting considering that Netflix runs its streaming service on AWS.

Economic reality

The arrival of an advert-supported cheaper subscription plan comes after years of Netflix executives adamantly opposing adding commercials to their service plans.

Netflix subscriber base grew tremendously during the Covid-19 pandemic.

In January Netflix said it had grown its global customer base to a total of 222 million subscribers during 2021.

But the economic consequences of the pandemic and the lockdowns began to become apparent n 2022.

In April this year Netflix revealed that for the first time in ten years, it had experienced a big fall in subscribers (200,000 people had left the platform) during its first quarter. It also said it would cut hundreds of jobs.

Amid that grim outlook, Netflix had a change of heart about adverts and said it would look at an advert-supported cheaper subscription plan.

Netflix at the same time had also warned shareholders that another two million subscribers were likely to leave in the three months to July.

But in the end only 970,000 subscribers left the service in the three months to July.

With Netflix struggling to maintain the pace of growth it had seen during the pandemic, the advert-supported plan made sense for the streaming giant, as it focused on cutting costs.

In March Netflix raised prices in certain countries, including the UK and Ireland, for the second time in less than 18 months.

Another cost cutting exercise from Netflix is stopping users sharing their passwords with family and friends.

In March last year Netflix warned it was testing account passwords, as it sought to clampdown on the revenue losing problem of password sharing.

Then in March 2022, Netflix began testing new tools to crackdown on password sharing between people who don’t live in the same household.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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