Netflix Concedes to Ad-Supported Tier, Cheaper Plan Should Be Available within One to Two Years

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Netflix executives said last month that an ad-supported tier wasn’t in the streamer’s plans, but the company’s disappointing first-quarter 2022 financial results appear to have prompted co-CEO Reed Hastings into singing a different tune. Hastings confirmed in an earnings interview posted to YouTube yesterday that Netflix had begun looking into offering a cheaper tier that would feature ads. The new plan should be unveiled within one to two years.

“One way to increase the price spread is advertising on low-end plans and to have lower prices with advertising,” Hastings said. “Those who have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription.”

“But as much as I’m a fan of that, I’m a bigger fan of consumer choice. Allowing consumers who would like to have a lower price and are advertising-tolerant get what they want makes a lot of sense. So, that’s something we’re looking at now, we’re trying to figure out over the next year or two. Think of us as quite open to offering even lower prices with advertising as a consumer choice.”

Netflix Will Add Advertising In “Next Year Or Two”; Co-CEO Reed Hastings Finally Concedes “Consumer Choice” Prompting Cheaper Plan (Deadline)

Netflix co-CEO Reed Hastings finally acknowledged what most people outside of the company have been saying for years: In order to keep growing, the company will need to incorporate ads.

The executive offered his view on the subject Tuesday after Chief Product Officer Greg Peters addressed the spread in pricing among different territories and subscription plans with a stunning declaration. The execs were speaking on the company’s first-quarter earnings interview, which was posted to YouTube this evening, per quarterly custom.

No specific outline was offered for when or how advertising would be phased in. But the comments took on extra urgency given their timing. Earlier today, Netflix reported not only a subscriber miss, but its first decline in global subscribers since 2011. In part, it blamed competition, voicing concerns about the crowded marketplace in a more full-throated way than they had before.

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Tsing Mui
News poster at The FPS Review.

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