According to Netflix CEO Reed Hastings, during the company’s Q1 earnings conference call, the streaming service will gradually introduce a lower-cost, ad-supported tier over the next year or two. This news comes after the company said it would stick to subscription-only plans for many years, and news on their recent consumer losses, totaling over 200,000.
The price would be lower, but it is unclear how many ads would run while watching a program. Hastings explained the choice, with the following: “Those that have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription. But as much as I’m a fan of that, I’m a bigger fan of consumer choice. And allowing consumers who would like to have a lower price and are advertising-tolerant get what they want, makes a lot of sense.”
Citing HBO Max, Hulu, and Disney+’s upcoming plans for an ad-supporting tier, Hastings continued: “I don’t think we have a lot of doubt that the ad model works. I’m sure we’ll just get in and figure it out — as opposed to test it and maybe do it or not do it.”
Just last month, Netflix CFO Spencer Neumann said that an ad-supported tier was not in their plans “right now”, but it looks like the tiles have changed. Netflix still hasn’t figured out that compelling content is what draws consumers to their streaming services, not the number of ads on it. Netflix distributes and produces too many movies/TV shows that it’s very easy to get lost in the sea of content available on the streaming service, with an ever-growing algorithm. Here’s hoping they restructure their original content, because cracking down on password sharing and launching an ad-supported tear won’t necessarily help.