In this photo illustration the Netflix logo on the App Store is viewed on a smartphone screen.
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After years of resisting ads on its streaming service, Netflix is now “open” to offering lower-priced tiers with ads, co-CEO Reed Hastings said Tuesday.
Hastings has long been opposed to adding commercials or other promotions to the platform, but said during the company’s pre-recorded conference call that it made “very good sense” to offer customers a cheaper option.
“Those who have followed Netflix know that I was anti-complexity of advertising and 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 it makes a lot of sense to give consumers who want lower price and are advertising-tolerant what they want.”
The option probably wouldn’t be available on the service for another year or two, Hastings said. A new ad-supported tier has plenty of upside potential for Netflix, which on Tuesday reported its first loss of subscribers in more than a decade.
Netflix attributed growing competition from recent streaming adoption by traditional entertainment companies, rampant password sharing, inflation, and the ongoing Russian invasion of Ukraine for the recent stalemate in paid subscriptions.
To attract more subscribers, Netflix has increased its content spending, especially originals. To pay for this, the company raised the prices of its service. According to Netflix, these price changes are helping to increase revenue, but were partly responsible for a loss of 600,000 subscribers in the US and Canada last quarter.
A lower-priced option that includes ads could keep some budget-conscious consumers on the service and give Netflix another way to make money.
“It’s pretty clear it’s working for Hulu. Disney does it. HBO did it,” Hastings said. “I don’t think we have much doubt that it works.”