Amid huge subscriber losses and results allegedly negatively affected by password sharing, Netflix is now coming to the idea of offering an ad-based model to grow its subscriber base and earn more. silver.
For years, Netflix had said it had no interest in a setup like this, but during the company’s latest earnings briefing, founder Reed Hastings said it might finally be time to do. Nothing is confirmed yet, however, but Netflix would essentially follow every other major streaming company in offering an ad-based option alongside a subscription-based offering.
Hastings said, “Those who have followed Netflix will know that I have been against the complexity of advertising and a big fan of the simplicity of subscription.” At the same time, Hastings said he’s “a bigger fan of consumer choice,” and that’s where an ad-based model could come in.
“Allowing consumers who would like to have a lower price and who are ad-tolerant to get what they want makes a lot of sense,” Hastings said. “So that’s something we’re looking at now. We’re trying to figure it out over the next two years. But consider us quite open to offering even lower prices with advertising as a consumer choice.”
“I think it’s pretty clear that it works for Hulu. Disney does it. HBO did it. I don’t think we have much doubt that it works, that all of these companies have figured it out “, he added. “I’m sure we’ll just go in and figure it out rather than test it and maybe do it or not do it. So I think we’ll really go in. But again, that would be a layer of plan, like it’s at Hulu. So if you still want the ad-free option, you’ll be able to have it as a consumer. And if you’d rather pay a lower price and are ad-tolerant, that’s also – we I’ll supply you too.”
Netflix’s Gregory Peters went on to say that an ad-based Netflix Tier is an “exciting opportunity that we want to explore further,” but don’t expect a new Netflix Ad Tier to roll out tomorrow.
Also on the call, Hastings said a potential ad-based tier wouldn’t be a “short-term” solution to Netflix’s financial troubles right now. In fact, offering it immediately could make Netflix’s numbers even worse, Hastings said, because paying subscribers could opt for the lower price instead of sticking with their existing premium subscription.
“Once you start offering a cheaper plan with optional ads, some consumers take it. And we have a large install base that’s probably pretty happy where it is. So think of it as if would do gradually over a few years in terms of material volume,” he said.
Netflix recently increased its prices, and subsequently it has lost 200,000 subscribers in the last three months and expects to lose 2 million more in the coming months. Netflix also confirmed that it will continue to crack down on password sharing, as there are over 100 million shared accounts worldwide, and Netflix wants a slice of them.
Netflix raises subscription prices and cracks down on password sharing comes just after the company announced it made $29.7 billion in revenue and a profit of $5.1 billion in 2021, while Netflix co-CEOs Ted Sarandos and Reed Hastings have earned over $70 million in salary. year.
Beyond TV and movies, Netflix now buys video game studios to make games based on Netflix properties. Just this week, the company announced that it had acquired Boss Fight as part of its effort to create a “world classic” game development pipeline.
For more on Netflix, check out all the TV shows and movies coming to the platform in April 2022.