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Netflix Adding Ad-Supported Option in ‘Year or Two’ According to CEO

Matt Tamanini

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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