Enlarge / Netflix CEO Reed Hastings at the Milken Institute Global Conference in Beverly Hills, California on October 18, 2021.
Getty Images | Bloomberg
Netflix plans to roll out a cheaper subscription tier with ads, CEO Reed Hastings said in an interview on Tuesday to discuss first-quarter earnings. Netflix’s revenue growth is slowing amid the loss of subscribers, and the company’s stock price fell about 37 percent on Wednesday at the time of writing.
Hastings said that an ad-supported tier is something “we’re trying to figure out over the next year or two,” and that Netflix is ”pretty open to offering even lower prices with ads as the consumer choice.”
“Those who follow Netflix know that I hated the complexity of advertising and was a big fan of the simplicity of subscriptions,” Hastings said. “But as much as I’m a fan of that, I’m a bigger fan of consumer choice, and allowing consumers who want lower price and are ad-tolerant to get what they want makes a lot of sense.”
When asked if Netflix would test an ad-supported plan in small markets before a global rollout, Hastings suggested that he didn’t think it was necessary. “No, I think it’s pretty clear it’s working for Hulu. Disney does it; HBO did. I don’t think we have much doubt that it works. You know all these companies figured it out. I’m sure we’re just going to go in there and find out, rather than testing it and maybe doing it or not doing it.”
If Netflix introduces ads, “it would be a plan level like Hulu. So if you still want the ad-free option, you can have it as a consumer. And if you’d rather pay a lower price and you’re ad-tolerant, we’ll take care of you, too,” Hastings said. Netflix prices in the US currently range from $9.99 to $19.99 per month. Ad
Netflix is also fighting password sharing
Netflix said last month it will combat password sharing by charging an additional fee of about $3 from users who share accounts with people in other households, with the fee first being introduced in Chile, Costa Rica and Peru will.
“[I]In addition to our 222 million paying households, we estimate that Netflix is shared with over 100 million other households, including over 30 million in the UCAN region [US and Canada]’ Netflix said in its letter to shareholders on Tuesday. The letter said Netflix was planning “a more effective monetization of multi-household sharing.”
Netflix said that “account sharing as a percentage of our paid membership hasn’t changed much over the years,” but it’s becoming increasingly important to the company as it struggles to grow its subscriber base. Hastings discussed plans to tackle account sharing without giving many details:
We are working to monetize sharing. We’ve been thinking about this for a few years, but when we were growing rapidly it wasn’t a high priority to work on it and now we’re working very hard on it. Keep in mind that that’s over 100 million households who already choose to watch Netflix. They love the service; we just have to be paid for it to a certain extent.