- Netflix now says it’s open to cheaper ad-supported levels for its streaming service.
- The big setback 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 let consumers have choices.
Netflix
is open to introducing cheaper ad-supported tiers for its
transmission
service, after years of resisting the option.
“Those who have followed Netflix know that I have been 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 Tuesday.
“But as much of a fan of that as I am, I’m a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and tolerate advertising to get what they want makes a lot of sense,” he said. . aggregate. “That’s something we’re looking at now, we’re trying to figure it out over the next year or two. But think of us as being pretty open to offering even lower prices with advertising as a consumer option.”
Hastings did not say how much a cheaper level might cost.
In September 2020, Hastings told Variety that having no ads was “the best capitalism” for the company, as opposed to a philosophical objection to ads.
The change comes as Netflix said it lost 200,000 subscribers in its first quarter, the streaming service’s first drop since 2011. This sent shares down 25% on Tuesday. Netflix stock price is about 40% lower year-to-date.
A cheaper ad-supported tier could give Netflix books some support.
The company forecast the loss of another 2 million subscribers in its current second quarter and said revenue is not growing as fast as it would like any time soon.
“It’s pretty clear that it’s working for
Hulu
. Disney is doing it. HBO did it,” Hastings said. “I don’t think we have much doubt that it will work.”
Before Hastings’ comments, industry insiders questioned the viability of an ad-supported Netflix, Insider’s Elaine Low and Ashley Rodriguez reported. Needham analysts estimated in a Jan. 21 investor note that Netflix could earn $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 Insider’s deep dive on the economics of an ad-supported Netflix.