Netflix has announced plans to introduce an ad-supported version of its streaming product.
The company is experiencing a downward trend in subscriber numbers due to rising prices and the onset of a new streaming landscape, with players like Apple TV+ and Disney+ taking a bite into the streaming giant’s subscription revenue.
Netflix co-CEO Ted Sarandos confirmed the news during the Cannes Lions International Festival of Creativity event, held in June.
He said that the new plan, which shall arrive very soon, shall be aimed at those who thought Netflix was too expensive.
“We’ve left a big customer segment off the table, which is people who say: ‘Hey, Netflix is too expensive for me and I don’t mind advertising.
We are adding an ad tier; we’re not adding ads to Netflix as you know it today. We’re adding an ad tier for folks who say, ‘Hey, I want a lower price and I’ll watch ads.’”
He confirmed that the company is already discussing it with ad-sales partners. Even though he did not say anything specifically, it is speculated that the company wants to launch the new ad-supported tier this year.
This comes after Netflix is also reportedly cracking down on account sharing, with the company intending to add an extra payment option for subscribers who share their accounts with different households. Netflix believes this is the best way forward in dealing with losing subscribers for the first time in ten years, with the company informing shareholders that revenue growth had “slowed considerably” due to account sharing and competition.
Netflix estimates that 222 million paying households are sharing their accounts with an additional 100 million households which are not being monetized. Netflix confirmed that they plan to implement in the future “more effective monetization of multi-household sharing”.
Sarandos said he believes Netflix could make a comeback in terms of growth once these plans are put in motion. He said, “We have plenty of scale and profitability and free cash flow to continue to grow this business. There’s still a lot of room to grow.”