After years of rejecting calls for ad-supported streaming, Netflix co-founder and CEO Reed Hastings said in a earnings call Tuesday that the company was “quite open to offering even lower prices with advertising as a consumer choice.”
Apparently, the company is now considering the option and “trying to find out in the next year or two.” Hastings acknowledged that bringing a level supported by advertising would be a big change in the company’s thinking, saying he had historically been “against the complexity of advertising and a big fan of the simplicity of subscriptions.”
Hastings now presents the idea of an ad-supported level as something that “makes a lot of sense” to “consumers who would like to have a lower price and are tolerant of advertising.”
Following Tuesday’s news that it lost subscribers for the first time in a decade, Netflix seems open to many things it had rejected – co-CEO Ted Sarandos even outlined what it might take to move to the long-talked-about live sports. Quoted by Deadline, he said: “I’m not saying we will never play sports, but we will have to see a way to increase a large revenue stream and a large profit stream with it”, which is a significant change from an apartment that Netflix has not offered before.
Netflix is far from the only company to introduce a level supported by advertising. Competitors such as Hulu, Peacock, and even HBO Max offer plans that allow consumers to pay less (or, in Peacock’s case, nothing) in exchange for occasional interruptions. Disney has also announced that it will add an ad-supported option to Disney Plus by the end of the year.
Netflix currently charges $ 10 per month for its base level, $ 15.49 per month for its standard level and $ 20 per month for the premium level. These prices are relatively new – the company raised them in March. During the conversation, Hastings said he was proud of Netflix’s “price allocation,” but as we said in January, the company’s deep penetration means it has limited opportunities to try to make more money outside of price increases again. again. Introducing a cheaper, ad-supported level (as well as trying to reduce password sharing) may be part of the company’s plan to increase its customer base and introduce a different revenue stream.
Updated at 7:18 PM ET: Added a note on Ted Sarandos regarding live sports.
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