Netflix co-CEO Reed Hastings said Tuesday that after years of opposition to adverts on its streaming service, the company is now “open” to offering lower-priced tiers with ads.
Hastings has traditionally opposed introducing advertisements or other advertising to the platform, but he said it “makes a lot of sense” to offer users a cheaper choice during the company’s prerecorded quarterly conference call.
“Those who have followed Netflix know that I have been a strong advocate of the simplicity of membership and have been against the complication of advertising,” Hastings stated. “However, as much as I support that, I am a stronger supporter of consumer choice, and allowing people who want a cheaper price and are tolerant of advertising to obtain what they want is a good thing.”
According to Hastings, the option would likely not be available on the service for a year or two. Netflix, which suffered its first subscriber drop in more than a decade on Tuesday, has a lot of earnings potential with a new ad-supported tier.
Netflix attributed the recent halt in paid subscriptions to increased competition from traditional entertainment firms’ recent streaming releases, as well as widespread password sharing, inflation, and the ongoing Russian invasion of Ukraine.
Netflix has upped its content spending, notably on originals, in order to attract more members. To cover the costs, the company increased the price of its service. Netflix said the price increases are helping to boost income, but they also contributed to a 600,000 member loss in the United States and Canada in the most recent quarter.
A lower-tier alternative with adverts might keep some price-conscious customers on board while also providing Netflix with a new revenue stream.
“It’s evident that it’s paying off for Hulu.” It’s being done by Disney. Hastings stated, “HBO did it.” “I don’t think there’s any doubt in my mind that it works.”