Netflix is ​​exploring cheaper subscription packages with ads

  • Netflix now says it’s open to cheaper tiers with ad support for its streaming service.
  • The big reversal came when Netflix said it lost 200,000 subscribers in its first quarter.
  • Co-CEO Reed Hastings said it “makes a lot of sense” to allow consumers choice.

Netflix

is open to introducing cheaper, ad-supported tiers for its


streaming

service — after years of resisting the option.

“Those who follow Netflix know that I am against the complexity of advertising and I am a big fan of the simplicity of subscription,” co-CEO Reed Hastings said in an earnings interview on Tuesday.

“As much as I’m a fan of it, I’m a big fan of consumer choice, and allowing consumers who would like to have a lower price and are tolerant of advertising to get what they want makes a lot of sense,” he said. added. “That’s something we’re looking at now, we’re trying to find out in the next year or two. But think of us as quite open to offering even lower prices with advertising as a consumer choice.”

Hastings did not say how much a cheaper tier would cost.

In September 2020, Hastings told Variety that going ad-free was “the best capitalism” for the company, as opposed to a philosophical objection to ads.

The move comes as Netflix said it lost 200,000 subscribers in its first quarter – the streaming service’s first decline since 2011. That sent the stock down 25% on Tuesday. Netflix’s stock price is about 40% lower year-to-date.

A cheaper ad-supported tier could give Netflix books some support.

The company is forecasting the loss of another 2 million subscribers in its current second quarter and said revenue is not growing as fast as it would like in the short term.

“It’s pretty clear that it’s working for


hulu

. Disney is doing this. HBO did it,” Hastings said. “I don’t think we have much doubt that it works.”

Prior to Hastings’ comments, industry insiders cast doubt on the viability of an ad-supported Netflix, Insider’s Elaine Low and Ashley Rodriguez reported. Needham analysts estimated on Jan. 21 that Netflix could make $9 billion a year in potential revenue by adding ads.

Netflix last raised prices in January. A Basic plan is now $9.99, the Standard plan is $15.49, and the Premium plan is $19.99.

Read the Insider’s deep dive into the economics of an ad-supported Netflix.

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