After Netflix announced that they had lost 200,000 subscribers during the first quarter of 2022, a handful of company executives participated in a quarterly earnings interview to get into depth on the particulars released in their letter to shareholders.

During a conversation about how the recent price increases might have impacted churn and subscriber growth during Q1, CEO Reed Hastings jumped in to drop the bombshell that many across the industry have been waiting for: Netflix is working on an ad-supported option.

“And those who will follow Netflix know that I’ve been against the complexity of advertising, and a big fan of the simplicity of subscription,” he said. “But as much as I am a fan of that, I’m 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. So that’s something we’re looking at now, we’re trying to figure out over the next year or two, but think of us as quite open to offering even lower prices with advertising as a consumer choice.”

The CEO added that the streamer would likely bring in an outside company to integrate the advertising and ad-matching in the service so that Netflix could remain focused on their members and creating content that people will want to watch.

Unlike with their recent launch of tests to curb password sharing, Hastings said that they did not anticipate testing the ad-supported tier for consumers, because it has worked so well for their competitors.

“It’s working for Hulu, Disney’s doing it, HBO did it, I don’t think we have a lot of doubt that it works,” he said. “All those companies have figured it out, I’m sure we’ll just get in and figure it out.”

This option would introduce Netflix’s first advertising-supported plan for consumers who were looking for a lower-priced entry point to the product and were ad-tolerant, but, Hastings reiterated that if customers wanted to retain their ad-free viewing experience, that would remain unchanged.

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Netflix is a leading subscription-based video streaming service that offers on-demand access to an extensive library of over 3,000 movies, 2,000+ TV shows, and a growing collection of acclaimed Netflix originals. Renowned for producing groundbreaking content, Netflix has become a cultural powerhouse with hit originals like “Stranger Things,” “Wednesday,” “Squid Game,” “The Crown,” “Tiger King,” “Bridgerton,” “The Witcher,” and “Black Mirror.”

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The platform constantly updates its catalog, introducing fresh content alongside timeless classics and international hits. Netflix’s commitment to storytelling has also earned critical acclaim, with award-winning exclusives such as “Roma,” “Marriage Story,” “The Power of the Dog,” “Mank,” and “Ma Rainey’s Black Bottom.” In 2023, their animated film “Guillermo del Toro’s Pinocchio” won an Academy Award for Best Animated Feature, further solidifying Netflix’s reputation for high-quality content.

Recently, Netflix has expanded beyond standard movies and TV titles with the addition of video podcasts, and is also exploring a digital store that would offer third-party streamers within the app.

Netflix offers three plans – stream on 2 devices in HD with the “Standard with Ads” ($8.99) plan, on 2 devices in HD with the “Standard” ($19.99) plan, and 4 devices in up to 4K on the “Premium” ($26.99) plan.

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