Netflix is looking for a $7-$9 price tag for its new ad-supported plan

Netflix plans to introduce its new cheaper option in at least half a dozen markets in the final three months of the year.  Netflix Inc.  It plans to price its new ad-supported tier between $7 and $9 a month, about half of its most popular current plan, which costs $15.49 a month without ads.

 The goal is to attract subscribers who are willing to see specific ads in exchange for a low monthly subscription.  As the streaming TV pioneer prepares to introduce ads for the first time, it is trying to strike a delicate balance between reaching a more cost-effective consumer while providing an enjoyable experience.

Netflix hopes to sell four minutes of ads per hour for the ad-supported service, according to people familiar with the company's plans.  The company displays ads before and during some shows, but not after.  It says it wants to make smaller deals with advertisers first so it doesn't overpromise and flood viewers with ads, the people said, who declined to be identified and the talks are private.

Netflix plans to introduce its new cheaper option in at least half a dozen markets in the final three months of the year.  The full launch will have to wait until early next year, the company said.  Details of the service began to leak as Netflix laid out its plans and met with business partners.  A lot can change as a company grows its business.

Netflix has long been marketed as a consumer-friendly alternative to cable TV.  People can watch TV shows and movies on demand and ad-free.  

They can cancel (or enroll) at any time without much hassle and access a huge list of programs.  But subscriber losses in the first half of this year forced it to finally embrace advertising.  They believe the cheaper range will attract new price-conscious customers and offer a cheaper alternative to those willing to cancel.

The new tier could generate $8.5 billion a year worldwide for Netflix by 2027, including subscription fees and ad sales, according to media consultancy Ampere Analytics.

 Many cable networks air between 10 and 20 minutes of commercials per hour.  Most streaming services offer less than cable.  Some, like Hulu, frustrate viewers by showing the same ad over and over again.

Netflix hopes to avoid these frequent complaints by launching slowly.  It doesn't use multiple targets to tailor ads to the viewer.  Many people see the same ads.  And Netflix wants to make sure the same ads aren't repeated over and over again.

Much of this work was done by Microsoft Corp., which won the right to be Netflix's exclusive advertising and sales technology partner.  is done by  The tech giant has little experience with TV streaming, but has built a $10 billion ad business in recent years.  Netflix is   in talks with film and television producers, while Microsoft is talking to several advertising agencies and technology providers.  The companies also have joint meetings with some advertising agencies.

Netflix declined to comment on the details of its plans, and many advertisers, partners and investors still have questions.  Netflix did not estimate how many people it expects to sign up at the ad level, or when it will allow third parties to measure its viewership.

Netflix has protected its audience metrics, which give it a proprietary and competitive advantage.  The company has always been able to say that these numbers are irrelevant because they don't sell ads.  But advertisers will have to work with an outside company like Nielsen to figure out how many people are actually watching Netflix.

Netflix is   entering advertising at the same time as its biggest rival, Disney+.  While Disney is raising the price of its flagship plan and maintaining the current price of its ad-supported version, Netflix is   actually lowering the price of its service.

Netflix management started making decisions about which shows should and shouldn't have ads.  The company doesn't advertise on children's shows, at least not initially.  It also does not include commercials during its original films.  The company wants to run several ads on its own TV shows. 

It also seeks the right to place advertisements where it licenses partners.  Studios like Sony, Universal, Warner Bros.  And Paramount is happy to charge Netflix to put ads in old movies or TV shows.  They are not that interested in allowing ads in new shows.

Meanwhile, advertisers are celebrating Netflix's decision.  The rise of ad-free services like Netflix, Amazon Prime Video and Disney+ has caused an existential crisis among marketers.  They fear that television, once the world's largest ad sector, is being swallowed up by services that don't show ads.  One agency predicts that the amount of time people watch ad-supported videos will decrease by 6% by 2025.  Now that Netflix and Disney+ are entering the fray, they say it will actually increase by 1%.