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Netflix said it will introduce a streaming plan with advertising for roughly $7 per month in November, a move to attract new subscribers after the company lost customers in the first half of the year.
The $6.99 cost for the “Basic with Ads” plan is $3 less than Netflix’s lowest-priced tier without commercials. The new option will roll out in 12 countries including the United States, Brazil, Germany, Japan and Korea, over 10 days.
Subscribers to the plan will see roughly four to five minutes of advertising per hour, Netflix said. Newly released films will have limited advertising to preserve the cinematic experience.
About 5% to 10% of Netflix’s programming will not be available on the ad-supported alternative because of licensing restrictions, Netflix Chief Operating Officer Greg Peters told reporters.
Shares of Netflix were up 5.4% at $232.86 in late afternoon trading. The company’s stock had fallen 62% this year before Thursday’s announcement.
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Netflix executives had adamantly opposed adding commercials to their service for years. They announced a change of heart in April when the company stunned Wall Street by shedding subscribers in the first quarter and predicting additional defections.
“We at Netflix have a huge opportunity ahead to grow our unit and to attract more subscribers. And part of that is having a wide range of pricing plans,” Peters said on Thursday.
Peters declined to estimate how many customers would sign up for the ad-supported plan or how much additional revenue Netflix might generate. The company will provide forecasts for the fourth quarter when it releases earnings on Tuesday.
