According to The New York Times, Netflix recently told its employees that it wants to introduce an ad-supported subscription in the final three months of the year. Netflix co-CEO Reed Hastings said in April the company was “open” to cheaper plans with advertising, but at the time, the plan wasn’t expected to be available for another 1-2 years. The note reportedly said, “yes, it’s fast and ambitious and it will require some trade-offs.”
Many subscription services offer cheaper plans that are subsidized by occasional advertisements, much like cable TV. Hulu is one example, which has an ad-supported plan for $6.99 per month (or $69.99/year) in the United States, in addition to the no-ads plan for $12.99/month. HBO Max also has a plan with ads for $9.99/month, which is $5 cheaper than the ad-free plan. Another Netflix competitor, Disney+, said in March that it would have an ad-supported option in “late 2022.”
Netflix reported a loss of 200,000 subscribers in the first quarter of 2022, a significant difference from 2.5 million subscribers the company expected to gain in that time span. The company blamed increasing inflation and COVID disruptions for the loss, as well as Russia’s invasion of Ukraine, which forced Netflix to shut down in Russia (where the company had around 700k subscribers).
The new ad-supported plan is part of Netflix’s plan to recover from its losses, in addition to cracking down on groups of people sharing passwords on Netflix accounts. The company estimated that more than 100 million households use a shared password, with around 30 million of those households in the United States and Canada. Netflix started testing a fee for password sharing in three countries (Chile, Costa Rica, and Peru), which unsurprisingly made people upset. The note send to Netflix employees said the ad-supported plan would be introduced “in tandem with our broader plans to charge for sharing.”
Source: The New York Times
