Netflix has partnered with Microsoft to offer a cheaper subscription plan that includes advertisements.
The streaming giant states that the service will be an “addition” to its existing, ad-free plans.
The company has not yet disclosed how much subscribers will be charged for the new service.
Netflix made the announcement after reporting its first subscriber decline in more than a decade and laying off hundreds of employees earlier this year.
The company announced on Thursday that it had chosen Microsoft as its global advertising technology and sales partner in order to introduce a “more affordable ad-supported subscription plan.”
In a statement, Netflix’s chief operating officer, Greg Peters, said, “It’s very early days and we have a lot of work to do.”
“But our long-term objective is distinct. More options for consumers and a superior brand experience than linear TV for advertisers “he added.
Netflix never desired advertisements. It based its entire business model on monthly subscriptions.
However, Netflix executives have been forced to break their own rules.
It follows appalling statistics indicating that the company was losing subscribers.
And as a result of the rising cost of living, households have viewed their Netflix subscription as a potential savings opportunity. Investors are frightened.
Netflix faces significant competition from Amazon Prime, HBO Max, Apple TV, and Disney+.
There are too many options and insufficient paying subscribers.
To adapt, Netflix is developing a cheaper, ad-supported service that will be rolled out later this year.
Like Pandora, Spotify offers free music if users are willing to watch commercials.
The hope is that Netflix will attract new audiences by embracing advertisements.
But the move also demonstrates that advertisements, which were deemed obsolete by premium streaming services only a few years ago, are still alive and well.
The Wall Street Journal reported on Tuesday that Netflix is attempting to renegotiate its contracts with major entertainment companies so it can include advertisements in its service.
Reportedly, the company has held talks with Warner Bros., Universal, and Sony Pictures Television.
Wednesday, Warner Bros. declined to comment when contacted by the BBC. Universal and Sony did not respond immediately to a request for comment from the BBC.
In April, Netflix’s stock dropped by more than a third after the company reported a sharp decline in subscribers and warned that millions more would soon leave the streaming service.
The sell-off reduced the company’s stock market value by more than $50 billion, and experts warned that it would be difficult for it to recover.
As a result of a decrease in customer numbers, the company announced 300 layoffs last month.
Ted Sarandos, co-chief executive officer of Netflix, stated in the same month that the company was in discussions with multiple companies to find ways to appeal to price-sensitive audiences.
“We will not add advertisements to Netflix as it currently exists. We’re adding an ad-supported tier for those who say, “Hey, I’ll pay less if I can watch ads.” “Mr. Sarandos told a conference audience in Cannes.