Netflix CEO now says he’s open to a cheaper, ad-supported plan

After years of rejecting calls for an ad-supported streaming tier, Netflix co-founder and co-CEO Reed Hastings said in the earnings call on Tuesday that the company is “quite open to offering even lower prices with ads, as a consumer choice.” .”

Apparently, the company is now investigating the option and “trying to figure it out over the next two years.” Hastings admits introducing an ad-supported tier would be a big change in the company’s thinking, saying he has historically been “against the complexity of advertising and a big fan of the simplicity of subscriptions”.

Hastings now touts the idea of ​​an ad-supported layer as something that “makes a lot of sense” for “consumers who want a lower price and are ad tolerant”.

After Tuesday’s news that it was losing subscribers for the first time in a decade, Netflix appears to be open to many things it had turned down — co-CEO Ted Sarandos even explained what might be needed for a long-rumored move to live sports. Quoted by Deadlinehe said: “I’m not saying we’ll never do sports, but we’re going to have to find a way to grow a great revenue stream and therefore a great profit stream,” which is a significant shift from the flat no Netflix has previously. offered.

Netflix would be far from the only company to introduce an ad-supported tier. Competitors like Hulu, Peacock, and even HBO Max offer plans that allow consumers to pay less (or, in Peacock’s case, nothing) in exchange for having their shows interrupted every now and then. Disney has also announced that it will add an ad-supported option to Disney Plus by the end of the year.

Currently, Netflix charges $10 per month for the Basic tier, $15.49 per month for the Standard tier, and $20 per month for the Premium tier. These prices are relatively new – the company raised them in March. During the conversation, Hastings says he’s proud of Netflix’s “price spread,” but as we explained in January, the company’s deep market penetration means it has limited options for trying to make more money outside of raising its share over and over. the prices. Introducing a cheaper, ad-supported tier (and trying to reduce password sharing) could be part of the company’s plan to increase customer base and introduce another revenue stream.

Disclosure: Custom Hour is currently producing a series with Netflix.

Update 7:18 PM ET: Added note about Ted Sarandos referring to live sports.

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