Netflix Is Exploring Lower-Priced Ad-Supported Subscription Plans

by Victoria Marian Belmis / Apr 21, 2022 04:51 PM EDT

Kim Se-jeong and Ahn Hyo-seop from "Business Proposal"

Netflix is exploring the option of a lower-priced ad-supported subscription tier after years of opposing advertisements on its streaming service. This consideration was shared by co-CEO Reed Hastings last Tuesday.

"Those who have followed Netflix know that I have been against the complexity of advertising and a big fan of the simplicity of subscription," Hastings said. "But as much as I am a fan of that, I am a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and are advertising-tolerant to get what they want makes a lot of sense."

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Several other streaming platforms already have an ad-supported option available among their subscriptions plans. Hulu has included an ad-supported subscription tier for quite some time. HBO Max launched an ad-included subscription tier for $9.99 per month just last year. In March 2022, Disney+ also announced it would start offering an ad-supported subscription tier later in the same year.

"It's pretty clear that it's working for Hulu. Disney is doing it. HBO did it," Hastings said. "I don't think we have a lot of doubt that it works."

According to Hastings, the option likely wouldn't be available on the service for a year or two. The company mentioned the increasing competition from all the recent streaming launches of entertainment companies, the rampant password sharing between households, inflation, and the ongoing Russian invasion of Ukraine for the recent stall in paid subscriptions.

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Adding a lower-tier ad-supported option could help retain price-conscious consumers with the service while still providing the streaming service with an additional avenue for garnering funds.

Netflix has recently increased its content funding, particularly on its originals, in an attempt to attract more subscribers, To match the cost, the company hiked the subscription prices of its service. The streaming giant said those price changes are helping to bolster revenue but were also partially responsible for a loss of 600,000 subscribers in the U.S. and Canada during the recent quarter.