Netflix Moving Forward to Add Commercials

Netflix will officially succumb to the needs of advertising soon enough. While the streaming service has long existed without the need for commercials, Netflix has decided to change course. Back in April, Netflix co-CEO Reed Hastings said that ads would soon arrive to the service, per Deadline

Hastings' comments dropped shortly after Chief Product Officer Greg Peters noted that there would be differences in pricing for subscriptions in different territories. Both Hastings and Peters discussed the current state of Netflix, and its future, during the company's first-quarter earnings call, which was posted to YouTube on Tuesday. During the interview, the CEO noted that they will begin to implement advertising on Netflix in the "next year or two."

"One way to increase the price spread is advertising on low-end plans and to have lower prices with advertising," Hastings said. "Those who have followed Netflix know that I've been against the complexity of advertising and a big fan of the simplicity of subscription." Even though he has been against the incorporation of advertising in the past, he acknowledged that this would be a necessary step for the streaming platform. He also said that this would be a positive for Netflix subscribers, as it will give them "consumer choice" and the ability to choose a cheaper subscription, albeit one with advertisements. 

"But as much as I'm a fan of that, I'm a bigger fan of consumer choice," he continued. "Allowing consumers who would like to have a lower price and are advertising-tolerant get what they want makes a lot of sense. So, that's something we're looking at now, we're trying to figure out over the next year or two. Think of us as quite open to offering an even lower." Hastings was asked whether Netflix would be testing out advertisement-laced subscriptions options before they roll it out to the masses. But, he stated, "I don't think we have a lot of doubt that it works," he said. "I'm sure we'll just get in and figure it out as opposed to testing it and maybe get in or not. … I think we'll really get in."

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It's unclear when exactly Netflix will implement this change. However, as Hastings stated, it could come as soon as 2023 or 2024. Netflix would be following suit with other streaming services, such as Peacock and Disney+, that allow users to choose whether they would like to pay more in order to have an ad-free experience. The Netflix CEO did stress that there would still be an ad-free option if subscribers wish to utilize it.