After years of rejecting requests for an ad-supported streaming tier, Netflix co-founder and co-CEO Reed Hastings said on Tuesday’s earnings call that the company is “very open to offering even lower ad-supported prices, like a consumer choice.
The company is apparently now looking at the option and “trying to figure it out over the next year or two.” Hastings admits that the introduction of an ad-supported level would be a big shift in the company’s thinking, saying that he has historically been “against the complexity of advertising and is a big fan of the simplicity of subscription.”
Hastings now presents the idea of an ad-supported tier as something that “makes a lot of sense” for “consumers who would like to have a lower price and tolerate advertising”.
After Tuesday’s news that It lost subscribers for the first time in a decade.Netflix seems open to a lot of things it had shunned: Co-CEO Ted Sarandos even laid out what might be needed for a long-rumored move into live sports. Quoted by Deadlinehe said, “I’m not saying we never play sports, but we’re going to have to see a way to grow a big revenue stream and a big profit stream with it,” which is a significant change from the blueprint without Netflix. has previously offered.
Netflix would be far from the only company to introduce an ad-supported level. Competitors like Hulu, Peacock and including HBO Max offer plans that allow consumers to pay less (or, in Peacock’s case, nothing) in exchange for their shows being occasionally interrupted. Disney has also announced that it is add an ad option to Disney Plus by the end of the year.
Netflix currently charges $10 per month for its basic tier, $15.49 per month for its standard tier, and $20 per month for its premium tier. These prices are relatively new: the company I uploaded them in March. During the call, Hastings says he’s proud of Netflix’s “price differential,” but as we explained in January, the company’s deep market penetration means he has limited options for trying to make more money. out of raising prices again and again. Introduce a cheaper level with advertising (as well as trying to reduce password sharing) could be part of the company’s plan to increase its number of clients and introduce another source of income.
Update 7:18 p.m. ET: Added a note about Ted Sarandos referencing live sports.