Netflix says a cheaper ad-supported plan is in the works
It’s all to offset subscriber churn and password sharing.
UPDATE 5/10/2022 11:21 AM ET: In a recent note to employees, Netflix says they’re fast-tracking its ad-supported tier and could release it in the final three months of the year. The original story follows below.
That’s a big shift for the company, which has long resisted any advertising on its service. Thankfully, this new plan isn’t happening anytime soon.
Hastings said the change will happen gradually, with the next year or two being used to test out options. Here’s what he said on the recent earnings call:
Those who have followed Netflix know that I have been against the complexity of advertising, and a big fan of the simplicity of subscription,” Hastings said in an earnings call. “But as much as I am a fan of that, I am a bigger fan of consumer choice. And allowing consumers who would like to have a lower price, and are advertising-tolerant, get what they want, makes a lot of sense – Reed Hastings, Netflix CEO
Netflix lost a staggering 200,000 subscribers worldwide in its first quarter. The main reason? Netflix is currently winding down operations in Russia as a response to its invasion of Ukraine; a loss of 700,000 paying subscribers.
That’s not the only issue. Netflix increased its spending on content, which lead to a corresponding increase in subscriber fees.
Additionally, the service also estimates that over 100 million households are freeloading off of other people’s accounts, with account sharing running rampant. That explains the latest trials on adding non-household users for a modest fee.
The only worry we have is if UHD 4K content is going to be gated behind the higher pricing, or if Netflix will have two tiers of ad-supported content. So many questions, and not enough answers.
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