Netflix is open to the idea of introducing cheaper ad-supported plans to address its growth problems. After Netflix announced yesterday that it had lost 200,000 subscribers in the first quarter of 2022, CEO Reed Hastings said during the company’s earnings call (via CNBC) that the streaming service may change its stance regarding the presence of advertisements on the platform.
“Those who have followed Netflix know that I have been against the complexity of advertising and a big fan of the simplicity of subscription,” Hastings said during the earnings calls. “But as much as I am a fan of that, I am a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and are advertising-tolerant to get what they want makes a lot of sense.”
In recent years, Netflix regularly raised its prices to maintain its capability to invest in exclusive content. The latest price hike happened in January when Netflix raised the price of its different tiers in the US and Canada by $1 to $2 per month depending on the plan. In addition to increasing its investments in Netflix Originals, the company has also started offering access to a small selection of iOS and Android games to its subscribers.
Netflix is facing increased competition from other SVOD services such as Amazon Prime Video, Disney+, HBO Max or Apple TV+, and some of these services have already introduced cheaper ad-supported tiers. “It’s pretty clear that it’s working for Hulu. Disney is doing it. HBO did it. I don’t think we have a lot of doubt that it works,” Hastings said.
It remains to be seen if Netflix is really willing to change its business model and introduce ads on the platform. The streaming service also made it clear yesterday that it was ready to take new measures to stop password sharing between different households. Last month, the company already announced an upcoming experiment in Chile, Costa Rica, and Peru, where subscribers will be offered a new paid alternative to password sharing.