Netflix has said it might introduce a less-expensive, ad-based option in the future, and it could arrive sooner than expected. Netflix management said in a recent note to employees obtained by The New York Times that the new ad-based tier could launch by the end of 2022, which is earlier than the company apparently planned.
Specifically, Netflix management said the ad-based tier may launch in the final three months of 2022, so sometime in the October-December window. At around the same time, Netflix will ramp up efforts to stop password-sharing, a mission the company has been on for some time already. Whether or not Netflix launches the ad-based tier in all markets all at once or if it’s rolled out in waves remains to be seen.
For years, Netflix said it would not introduce an ad-based model, but the company announced a new way of thinking earlier this year after losing 200,000 subscribers. Netflix projects it will lose 2 million more subscribers in the months ahead. This has seemingly spooked analysts and investors, as Netflix’s stock price has taken a big hit this year.
Regarding the new ad-based model, the note from Netflix management reportedly said, “Yes, it’s fast and ambitious and it will require some trade-offs.”
The NYT report said Netflix’s new ad-based model would cost less than Netflix’s existing most popular plan, which costs $15.50/month. HBO Max’s ad-based model costs $10/month, while Peacock’s plan with commercials costs $5/month.
The memo from Netflix management mentioned the competition and said, “Every major streaming company excluding Apple has or has announced an ad-supported service. For good reason, people want lower-priced options.”
Netflix founder Reed Hastings said during a recent earnings call that an ad-based model could hurt the company’s overall revenue because people who currently pay for an ad-free package might opt for a less expensive option. Come from Sports betting site VPbet
“Once you start offering a lower-priced plan with ads as an option, some consumers take it. And we’ve got a big installed base that probably are quite happy where they are,” he said.
As for password-sharing, Netflix plans to continue to crack down on this because there are more than 100 million shared accounts worldwide, and Netflix wants a piece of that.