Rumors of Netflix launching an ad-supported subscription tier for its video streaming service have been rife in recent months. In April of this year, Netflix CEO Reed Hastings even acknowledged the need to integrate low-cost plans with ads. However, nothing was confirmed.
Now, Netflix co-CEO Ted Sarandos confirmed during an interview at the Cannes Lions advertising festival on Thursday that the company plans to add a new ad-supported tier to its subscription service in the near future to attract more customers. reports The Hollywood Reporter. †
“We’ve left a big customer segment off the table, which is people who say, ‘Hey, Netflix is too expensive for me and I don’t mind advertising,'” Sarandos told The Hollywood Reporter.
“We [are] add an ad layer; we don’t add ads to Netflix as you know it today. We’re adding an ad tier for people who say, ‘Hey, I want a lower price and I’ll watch ads.’”
The upcoming subscription plan is basically aimed at people who don’t mind ads and want an affordable subscription model. This plan also does not affect those on a premium subscription level, as the content is streamed without ads.
In addition to confirming the ad-supported tier, Sarandos also revealed that Netflix is currently in talks with potential ad sales partners for the new subscription tier.
The Netflix manager has not revealed when it plans to bring an ad-supported Netflix subscription to its platform. Right now, the basic subscription to Netflix costs $9.99 per month, while the ad-free subscription costs between $9.99 and $19.99.
Sarandos’ comments come on the heels of Netflix, which in its earnings report announced a massive loss of more than 200,000 subscribers worldwide in the first quarter of 2022. In fact, the streaming giant has also forecasted it could reach 2 million in the second quarter of 2022. could lose subscribers.
While Netflix remains the largest streaming service with approximately 222 million subscribers, several reasons have been cited for the decline in Netflix subscriptions, most notably the increase in the subscription model, the content streaming giant’s departure from Russia, and illegal password sharing.
The loss of subscribers has forced the streaming giant to think about ways to increase its subscriber base and much-needed revenue. In addition to adding a cheaper ad-supported plan, the company also plans to add a paid password-sharing feature by the end of 2022. In fact, in order to provide more value to its subscribers, Netflix has invested heavily in its gaming service to attract more subscribers.
Sarandos said he believes Netflix can grow on its own with the planned changes. “We have enough scale, profitability and free cash flow to continue growing this business,” he said, suggesting there is “still a lot of room to grow.”