What you need to know
- Netflix is planning a new ad-based tier that will launch in the next two years.
- Netflix is already the most costly subscription service but doesn't have any ads.
- No information on potential pricing has been given.
Netflix says that it will begin to offer an ad-based service over the next year or two according to a new report based on the company's Q1 earnings call.
Citing a move towards meeting consumer choice, Netflix co-CEO Reed Hastings reportedly said that the company would begin offering an ad-supported option despite his personal preference for the "simplicity" of subscriptions. Variety quotes Hastings as saying that he's a bigger fan of consumer choice than subscriptions, however.
"Those that have followed Netflix know that I've been against the complexity of advertising and a big fan of the simplicity of subscription," Hastings said. "But as much as I'm 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."
The news comes as Netflix works to arrest a worrying slump in subscriber growth. Things have gotten so bad that subscriber numbers are actually beginning to contract — Netflix lost 200,000 customers in the first three months of 2022. The news saw Netflix share prices plummet.
The idea of an ad-based business model isn't a new one and Netflix seems likely to continue to offer an ad-free service for those willing to pay for it. Disney+ recently announced plans for a new ad-based tier while services like HBO Max already use ads to good effect. Apple TV+ is considerably cheaper than most streaming services at $4.99 per month without ads, but not all companies have Apple's deep pockets behind them.
Netflix subscriptions currently start at $9.99 per month for a single HD stream but go all the way to $19.99 per month for up to four streams with 4K support. That's the only tier available to those who want 4K content, something the likes of Apple TV+ and Disney+ offer as standard.
Neither Hastings nor Netflix has said how much its ad-based tier will cost and we don't know when it'll launch, but it's now very much on the streamer's roadmap. Who knows how many customers it will have lost before it becomes a reality, though.
