According to the New York Times, Netflix executives announced to their employees that they are planning to roll out the streaming service’s ad-support lower-priced subscription tier. It will occur during the final three months of 2022. Executives also say that they are going to begin cracking down on password sharing among subscribers as well. This will be happening around the same time that the ad option will be available.
The ad service is a huge deal to Netflix. This is due to the fact that the streaming service decided to announce the new subscription tier after seeing its first loss of subscribers since 2011. The company revealed it lost 200,000 subscribers in the first three months of 2022. Prior to announcing the option, Netflix was very much against having an ad-supported plan.
Reed Hastings, Co-Chief Executive of Netflix, reportedly told investors that the streaming service will examine the possibility of introducing an ad-supported platform. However, he said that would be something that the company is seeking to do over the next year or two.
In the recent note to employees, that timeframe has apparently been pushed up. “Yes, it’s fast and ambitious, and it will require some trade-offs,” the note stated.
Netflix’s New Ad Tier Will Reportedly Cost Less
Although the price of the ad-supported tier is not being disclosed currently, the New York Times reports the service will cost less than Netflix’s current plan, which is $15.49 a month.
The Netflix executives also address competing with its competitors like Hulu, and HBO Max with the ad tier. “Every major streaming company, excluding Apple, has or has announced an ad-supported service,” the note to Netflix employees stated. “For good reason. People want lower-priced options.”
Currently, HBO Max now offers a commercial-free service for $15 a month. It also charges $10 a month for the service with advertising. Along with Apple, Disney’s streaming service Disney+ does not offer an ad-supported plan for its platform.
Meanwhile, Netflix is planning to raise prices for subscribers who are sharing their accounts with other people. Greg Peters, Chief Operating Officer at Netflix, explained in the company’s earnings call, “So if you’ve got a sister, let’s say, that’s living in a different city – you want to share Netflix with her. That’s great. We’re not trying to shut down that sharing. But we’re going to ask you to pay a bit more to be able to share with her.”
The Netflix chief went on to add that the ad-supported tier will be introduced in tandem with the streaming service’s “broader plans” to charge for sharing.”