Netflix is planning to roll out less expensive plans supported by advertising, finally joining other streamers who already offer cheaper plans with ads.
Per the Hollywood Reporter, Netflix co-CEO Reed Hastings revealed the move on the company’s quarterly earnings call Tuesday (April 19), adding that the company will be examining what those plans will look like “over the next year or two.” Netflix COO Greg Peters said that advertising “is an exciting opportunity for us.”
“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, get what they want, makes a lot of sense.”
Hastings said that the competitors embracing lower-priced subscriptions with ads played a role in changing the company’s mind. “It is pretty clear that it is working for Hulu, Disney is doing it, HBO did it. We don’t have any doubt that it works,” Hastings said, adding that it will be a plan similar to Hulu’s. Hastings also said that when Netflix launches its ad-backed tier, it won’t track data, which some of their streaming competitors do. “In terms of the profit potential, definitely the online ad market has advanced, and now you don’t have to incorporate all the information about people that you used to,” Hastings said. “We can stay out of that, and really be focused on our members, creating that great experience.”
Netflix’s decision to finally embrace advertising comes after their long resistance to the plan since its beginning, but with the streamer’s subscriber growth slowing and now declining, the pressure to bring new users has become too great to ignore.