Following a disappointing first quarter in which Netflix lost subscribers for the first time in a decade, the company has announced plans to launch a cheaper, ad-based subscription plan.

Netflix will work with Microsoft to launch a cheaper subscription plan that includes advertisements, the firms have said, as the streaming giant fights to attract customers.

Netflix announced its plan to develop the lower-cost offering on Wednesday after a disappointing first quarter in which it lost subscribers for the first time in a decade, and after years of resistance against the very idea of running ads.

The ad-supported subscription will be in addition to the three options already available, the cheapest being $10 per month in the United States.

Microsoft will be responsible for designing and managing the platform for advertisers who want to serve ads to Netflix users.

"It's very early days and we have much to work through," Greg Peters, Netflix's chief operating officer, said in a statement.

Microsoft added that advertisers "will have access to the Netflix audience and premium connected TV inventory."