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Netflix can promote low-priced ad-supported tier The company said in a recent memo to employees that it has a faster timetable for the end of the year than originally stated.
In the memo, Netflix executives said they’re aiming to introduce the ad tier in the last three months of the year, according to two people who shared the details of the communication and spoke on condition of anonymity to identify internal internal discussions. The note also said they plan to start cracking password sharing among their subscriber base at the same time.
Last month, Netflix stunned the media industry and Madison Avenue when it announced that it would begin offering a lower-priced subscription with ads, after years of making public that the ads would never appear on the streaming platform.
But Netflix is facing significant commercial challenges. while announcing first quarter earnings Last month, Netflix said it lost 200,000 subscribers in the first three months of the year – for the first time in a decade – and expects to lose another two million in the coming months. Since the subscriber announcement, Netflix’s share price has dropped sharply, wiping nearly $70 billion from the company’s market capitalization.
Reed Hastings, co-chief executive of Netflix, told investors that the company will examine the possibility of offering an ad-supported platform and will try to “solve it in the next year or two.”
The final note to staff signaled that the timeline was accelerating.
“Yes, it’s fast and ambitious and some compromises will be needed,” the note said.
A Netflix spokesperson declined to comment.
Netflix currently offers several payment tiers to access its streaming service; its most popular plan is $15.49 per month. The new ad-supported tier will cost less. Other streaming services have similar plans. For example, HBO Max offers a non-commercial service for $15 per month and charges $10 per month for service with ads.
Indeed, in the memo to employees, Netflix executives recalled their rivals, saying that HBO and Hulu have managed to “maintain strong brands while providing an ad-supported service.”
“Every major streaming company other than Apple has announced or has announced an ad-supported service,” the note said. “For good reason, people want lower-priced options.”
Last month, Netflix also announced that it plans to start charging higher prices to subscribers who share their account with several people.
“So if you have a sister, let’s say she lives in another city; If you want to share Netflix with him, that’s great,” said Greg Peters, head of operations at Netflix on the company’s earnings call.
Mr Peters said the company would “repeat for about a year” on password sharing before implementing a plan.
In a note to employees, Netflix executives said the ad-supported tier for the streaming platform will be rolled out “in line with our broader plans to charge for sharing.”
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