Netflix is looking into lower-cost ad-supported plans after years of resistance

Netflix co-CEO Reed Hastings said Tuesday that after years of opposition to ads on its streaming service, the company is now “open” to offering lower-priced tiers with ads.

Hastings has traditionally opposed introducing advertisements or other advertising to the platform, but he said it “makes a lot of sense” to offer users a cheaper choice during the company’s prerecorded quarterly conference call.

“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.”

According to Hastings, the option would likely not be available on the service for a year or two. Netflix, which suffered its first subscriber drop in more than a decade on Tuesday, has a lot of earnings potential with a new ad-supported tier.

Netflix attributed the recent halt in paid subscriptions to increased competition from traditional entertainment firms’ recent streaming releases, as well as widespread password sharing, inflation, and the ongoing Russian invasion of Ukraine.

Netflix has upped its content spending, notably on originals, in order to attract more members. To cover the costs, the company increased the price of its service.

Netflix said the price increases are helping to boost income, but they also contributed to a 600,000 member loss in the United States and Canada in the most recent quarter.

A lower-tier alternative with adverts might keep some price-conscious customers on board while also providing Netflix with a new revenue stream.

“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.”

For the latest Business News Follow BOL News on Google News. Read more on Latest Business News on oldsite.bolnews.com