Netflix CEO Reed Hastings confirmed yesterday that the streaming service is set to introduce a cheaper, ad-supported subscription option.
During a quarterly earnings call, Hastings admitted he's "been against the complexity of advertising and a big fan of the simplicity of subscription."
Still, "I'm a bigger fan of consumer choice," he added. "And allowing consumers who would like to have a lower price and are advertising-tolerant get what they want makes a lot of sense. So that's something we're looking at now."
It may not happen immediately; Hastings says it's something "we're trying to figure out over the next year or two. But think of us as quite open to offering even lower prices with advertising as a consumer choice." Hastings also says Netflix will not be using data-tracking and ad-matching when this new tier launches.
He goes on to state that the ad-supported model has already been proven to work for video-streaming services, citing Hulu, Disney+, and HBO as examples.
Hulu charges $6.99/month ($69.99/year) for its ad-supported plan and $12.99/month for no ads. Netflix's Standard plan is $15.49, so an ad-supported plan will likely be priced around the $8 mark. However, Netflix also has a Basic $9.99 plan that doesn't allow HD streaming. Could we see Netflix introduce a $5/month ad-supported tier without HD, too?
The decision to embrace ads comes after Netflix saw a drop in subscriber numbers for the first time in 11 years. The company also believes 100 million households are currently freeloading through password sharing.