Netflix has a new plan that includes advertisements, breaking a longstanding tradition at the company.
The new “Basic with Ads” subscription plan launched Thursday, making it the first plan at Netflix to offer advertisements. The new plan is also the cheapest option at $6.99.
The entry-level plan will include essentially all the same features and programs that users get with the $9.99 “Basic” plan only now their favorite shows will be interrupted by 15 to 30-second advertisements.
The addition of ads marks a turning point in Netflix’s trajectory as a company. One of the biggest draws of Netflix as a platform, when it first launched, was the lack of commercial interruptions.
One of the motivating factors for this decision may be the troubling year Netflix has had financially. Once the only game in town, new streaming services have cut into Netflix’s profits significantly. This year saw subscriber numbers drop for the first time in over a decade with stock prices reflecting the dip in users.
The increase in the number of streaming services, with some like Netflix raising subscription prices, has led some consumers to make hard decisions about what services they need or want. Netflix has also lost a significant amount of content to new streaming giants Peacock and HBO Max, both of which have cheaper plans that include advertisements.
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Despite this, Netflix has begun to grow again, and CEO Reed Hastings believes that the new plan will help maintain that growth.
“We believe that more choice, especially for more price-conscious consumers, will translate into meaningful incremental revenue and operating profit over time,” Netflix said of the new plan.
