What happened
Thursday morning, Netflix (NASDAQ: NFLX) filled in the details of its ad-supported subscriber tier. Investors obviously liked what they heard, and consequently they pushed up the streaming service's stock price. As of midafternoon trading, Netflix shares were rising at a 4%-plus clip over the previous day's close, well outpacing the S&P 500 index's 2.2% gain.
So what
Netflix's ad-supported tier has been formally christened Basic With Ads. It will cost $6.99 per month in the U.S. The tier will also be available in 11 other countries, including the U.K., Germany, Japan, Korea, and Mexico. Netflix did not specify the pricing for those non-U.S. markets.
Basic With Ads will launch on the morning of Thursday, Nov. 3. The tier will be the lowest on a four-rung ladder, underneath the video streaming giant's Basic, Standard, and Premium pricing levels.
The new tier's subscribers will be able to screen movies and shows at 720p/HD resolutions, while being fed an average of four to five minutes of advertising per hour, Netflix said. The company added without elaboration that "a limited number" of titles will be unavailable because of licensing restrictions, although it is working to resolve this.
Netflix is already pushing for advertisers to get aboard. In the press release heralding the arrival of Basic With Ads, it wrote that the service "represents an exciting opportunity for advertisers -- the chance to reach a diverse audience, including younger viewers who increasingly don't watch linear TV, in a premium environment with a seamless, high-resolution ad experience."
Now what
Although it's yet to be put through its paces with consumers, on paper Basic With Ads seems like a compelling offer. It's notably cheaper than Netflix's other tiers, and the ad load doesn't seem overly burdensome for viewers. As for the advertisers, the company's wide, global customer base is an enticing market, so there should be plenty of interest in buying spots.
