Rumors about Netflix launching an ad-supported subscription tier for its video-streaming service have been rife for the last couple of months. In April this year, Netflix’s CEO Reed Hastings had even acknowledged the need to incorporate low-end subscription plans with advertisements. However, nothing was confirmed.
Now, Netflix Co-CEO Ted Sarandos on Thursday has confirmed during an interview at the Cannes Lions advertising festival about the company’s plan to add a new ad-supported tier to its subscription service in the near future to attract more customers, reports The Hollywood Reporter.
“We’ve left a big customer segment off the table, which is people who say: ‘Hey, Netflix is too expensive for me and I don’t mind advertising,’” Sarandos told The Hollywood Reporter.
“We [are] adding an ad tier; we’re not adding ads to Netflix as you know it today. We’re adding an ad tier for folks who say, ‘Hey, I want a lower price and I’ll watch ads.’”
The upcoming subscription plan is basically aimed at people who don’t mind ads and want an affordable subscription model. This plan also does not affect those who are on a premium subscription tier, as the content will be continued to streamed without ads.
Besides confirming the ad-supported tier, Sarandos also revealed that Netflix is currently in talks with potential ad-sales partners for the new subscription tier.
The Netflix executive did not reveal when it plans to bring ad-supported Netflix plan to its platform. At present, the basic Netflix subscription costs $9.99 per month, while the no-ads subscription cost between $9.99 and $19.99.
Sarandos’ comments come on the heels of Netflix announcing a massive loss of over 200,000 subscribers globally in the first quarter of 2022 in its earnings report. In fact, the streaming giant has also forecasted that it could lose up to 2 million subscribers in the second quarter of 2022.
While Netflix remains the largest streaming service with roughly 222 million subscribers, several reasons have been cited behind the fall in Netflix subscriptions, majorly being the increase in the subscription model, the content streaming giant’s exit from Russia and illegal password sharing.
The loss of subscribers has forced the streaming giant to think of ways to increase its subscribers count and much-needed revenue. Besides adding a cheaper ad-supported subscription plan, the company also has plans to add a paid password-sharing feature by the end of 2022. To offer more value to its subscribers, Netflix has even invested heavily in its gaming service to attract more subscribers.
Sarandos said that he believes Netflix could return to growth on its own with the changes planned. “We have plenty of scale and profitability and free cash flow to continue to grow this business,” he said, suggesting that there’s “still a lot of room to grow.”
