Netflix is planning to offer a subscription that will have ads. However, the ad-supported subscription should cost less.
Netflix co-CEO Ted Sarandos has confirmed that the streaming company will begin testing an ad-supported subscription plan. Netflix appears to be in talks with companies including, but not limited to, Comcast, NBCUniversal and Google.
An internal memo leaked last month strongly suggested that Netflix was planning to launch an ad-supported subscription tier during the “last three months of the year.” The company had consistently denied rumors of introducing ads as they hinder the viewing experience, but it seems to have taken a U-turn.
Netflix was forced to introduce ads because it was leaving out a huge demographic, Sarandos suggested:
We’ve left a huge subscriber segment off the table, people who say: ‘Hey, Netflix is too expensive for me and I don’t mind advertising,’. We’re adding an ad tier for people who say, ‘Hey, I want a lower price and I’ll see the ad.
The co-CEO has insisted that “Netflix as you know it today” will not change. In other words, ads will not appear in any subscriptions that currently exist. Instead, the streaming company will introduce a new subscription tier. This package will have advertisements, and its price will also be comparatively less.
Netflix co-CEO Reed Hastings indirectly confirmed the arrival of subscriptions subsidized by ads last month when he said:
Those who have followed Netflix know that I’ve been a big fan of the complexity of advertising and the simplicity of subscriptions. But as much as I’m a fan of it, I’m a big fan of consumer choice. And allowing consumers to get what they want, who prefer low prices, and are ad tolerant, makes a lot of sense.
Netflix is facing tough competition. It is losing customers. Furthermore, most of the company’s competitors already offer ad-supported plans that are cheaper than their ad-free subscription. The cheapest Netflix subscription currently costs $9.99 in the US. It’s unclear whether Netflix will lower the price of an ad-supported subscription below $10.
Source: Hollywood Reporter
