Olivia Cavallaro Tech 08.26.2022 22:Aug PM EDT

Netflix Planning on Ad-Supported Plan with $7 to $9 Price Tag

The streaming giant is currently mulling on a $7 to $9 price tag for its ad-supported tier.

Netflix is planning to put a $7 to $9 price tag on its upcoming ad-supported plan, a media outlet revealed on Friday. The streaming giant is looking to introduce its budget-friendly, ad-supported tier towards the end of the year in six geographies, with a wider rollout sometime next year.

According to Bloomberg, the goal of the new ad-supported plan from Netflix is to gain more subscribers who are willing to pay a lower price in exchange for watching some ads. Because this is the first time the tech giant is introducing advertisements within its streaming service, it is striving to strike a balance between offering a more budget-friendly market while still providing a great viewing experience.

How Much Commercials Will Be in Netflix's Ad-Supported Plan?

Those who are familiar with Netflix's ad-supported plan said that the company plans to add four minutes worth of ads per hour of content, which is reportedly less than most of its competitors. Netflix will also show the advertisements before and during some programs, but not after.

The upcoming Netflix ad-supported plan with a planned price tag of $7 to $9 is geared towards more cost-conscious consumers, as the streaming giant's current offers are priced at $9.99, $15.49, and $19.99 per month. The decision to roll out a cheaper, ad-supported plan comes after Netflix announced it had lost subscribers for the first time in more than ten years, The Verge reported.

In April, Netflix's co-CEO Reed Hastings said the company was ready to embrace a cheaper ad-supported plan despite years of rejecting the idea of ads. Co-CEO Ted Sarandos said in June that they were already working on the ad-supported plan, and in July, Netflix confirmed teaming up with Microsoft, which will serve as its technological partner in delivering ads.

"Those who have followed Netflix know that I've been against the complexity of advertising, and a big fan of the simplicity of subscription," Hastings said in April, as per Reuters. "But as much as I'm a fan of that, I'm a bigger fan of consumer choice."

What to Expect from Netflix's Ad-supported Plan

The upcoming ad-supported plan from Netflix will unsurprisingly feature a number of downgrades from its current plans that do not have ads. Netflix executives confirmed that some content would not be available on its ad-supported plan at launch. Moreover, code found on Netflix's mobile app showed that the streaming service might not allow users on the ad-supported plan to download shows for watching offline.

Forbes reported this week that Netflix shares dropped 6%, adding to continued losses this year. Netflix's stock has now become one of the worst-performing stocks in the S&P 500, with analysts predicting that it will continue to underperform through the rest of the year. Netflix's ad-supported plan is expected to bring in $8.5 billion annually for Netflix by 2027, media consultancy Ampere Analytics predicted.