May 10, 2022
Netflix’s foray into ad-supported subscription streaming video could be a reality after October. The streaming behemoth last month announced it was considering the move after it lost 200,000 net subscribers globally and projected another 2 million sub loss in the current quarter, ending June 30.
Now The New York Times, citing sources familiar with the situation, said that senior Netflix management, in a note to staffers, said it wanted the less expensive ad-supported subscription plan up and running in the final three months of the year.
Co-founder and co-CEO Reed Hastings, on the company’s most recent earnings call, said the streamer was looking into an ad-supported option. The news was unexpected, since Hastings and other executives have long stated an aversion to including advertising on the platform and its 221 million global subs.
But that was before Netflix saw more than $50 billion in market valuation wiped out as investors dumped shares following the Q1 financial results, which included a $100 million decline in quarterly profit.
“Yes, it’s fast and ambitious and it will require some trade-offs,” read the Netflix note, per The Times. “Every major streaming company excluding Apple has or has announced an ad-supported service,” the note said. “For good reason, people want lower-priced options.”
And Netflix wants incremental ad revenue.
The streamer is also looking for incremental revenue gains by charging subscribers who share their account with third parties. Like advertising, Netflix had long turned a blind eye to password sharing — considering the practice organic marketing. But that mindset, too has changed.
“So, if you’ve got a sister, let’s say, that’s living in a different city; you want to share Netflix with her, that’s great,” Greg Peters, Netflix’s chief operating officer, said on last month’s fiscal call. “We’re not trying to shut down that sharing but we’re going to ask you to pay a bit more to be able to share with her.”
Peters said Netflix plans to launch the password sharing option in about a year after testing the concept.