Netflix Expedites Plan to Use Commercials on Streaming Platform
Commercials could be making their way to Netflix sooner than expected. After confirming just last month that it was looking to add an ad-support subscription sometime within "the next year or two," Netflix executives indicated at the start of May that it is looking to accelerate that timeline, with its lower-priced ad-supported tier potentially set to roll out by the end of 2022.
The possible acceleration of the ad-supported tier's rollout was revealed in a memo sent to employees, according to a report this morning by The New York Times. Two unidentified insiders revealed to the outlet that the memo, which also indicated Netflix plans to begin cracking down on password sharing at around the same time, shared that the company is eyeing a rollout sometime within the final three months of the year, so anywhere between October and December. The memo reportedly said, "Yes, it's fast and ambitious and it will require some trade-offs."
The decision to possibly expedite ads on the platform comes after Netflix last month posted its first loss of subscribers in more than a decade. The company ended Q1 of 2022 with 221.64 million subscribers, which was down from 221.84 million in Q4 of 2021. The subscriber decline was followed by a decline in Netflix stock.
At the same time the streamer experienced a subscriber loss, the company indicated it was considering introducing an ad-supported tier. Netflix co-CEO Reed Hastings said in mid-April that while he has "been against the complexity of advertising and a big fan of the simplicity of subscription," adding advertisements to the streaming platform is "one way to increase the price spread." Hastings explained that "allowing consumers who would like to have a lower price and are advertising-tolerant get what they want makes a lot of sense." Hastings shared that the company was "open" to adding an ad-supported tier, though he indicated that it would likely take more than a year for that tier to debut.
Netflix has not yet indicated what an ad-based tier would look like or how much it would cost. The streamer currently offers three subscription plans. Costing $10 per month, the basic plan allows SD streaming on a single device. The standard plan costs $15.50 per month and offers HD streaming on up to two devices at once. At $20 per month, the premium plan allows for HD streaming on up to four devices at once. None of the current plants have commercials. In the memo to employees, Netflix noted that "every major streaming company excluding Apple has or has announced an ad-supported service. For good reason, people want lower-priced options."