Netflix can provide a file Ad-supported low price tier By the end of the year, a faster schedule than originally stated, the company told employees in a recent note.
In the memo, Netflix executives said they aimed to introduce the ad layer in the final three months of the year, according to two people who shared contact details on the condition of anonymity to describe the company’s internal discussions. The memo also said that Netflix plans to start cracking down on password sharing among its subscriber base around the same time, the people said.
Last month, Netflix stunned the media industry and Madison Avenue when it revealed that it will begin offering a low-priced subscription that includes ads, after years of publicly stating that commercials will never be seen on the streaming platform.
But Netflix faces major commercial challenges. in ad first quarter earnings Last month, Netflix said it lost 200,000 subscribers in the first three months of the year – the first time this has happened in a decade – and is expected to lose another 2 million subscribers in the coming months. Since the joint announcement, Netflix’s stock price has fallen sharply, wiping out nearly $70 billion from the company’s market value.
Netflix co-CEO Reed Hastings told investors that the company will study the possibility of offering an ad-supported platform and that it will try to “find that out over the next year or two.”
The race to dominate broadcast television
A recent memo to staff indicated that the schedule had accelerated.
“Yes, it is fast and ambitious and will require some trade-offs,” the memo said.
A Netflix spokeswoman declined to comment.
Netflix offers a variety of payment levels for streaming access; Its most popular plan costs $15.49 per month. The new ad-supported tier will cost less. Other streaming services have similar plans. HBO Max, for example, offers a commercial free service for $15 per month, and charges $10 per month for the service with ads.
In fact, in a memo to employees, Netflix executives called out their competitors, saying that HBO and Hulu were able to “maintain strong brands while offering an ad-supported service.”
“Every major streaming company except Apple has announced or has announced an ad-supported service,” the memo reads. “For good reason, people want lower-priced options.”
Netflix has discussed its interest in building an ad infrastructure externally as well, including with a company called The Trade Desk, which helps advertisers place ads on various internet-enabled platforms, said a person familiar with the discussions who spoke on the condition of anonymity in order to describe them. That person said the Commerce Bureau counts former Netflix chief financial officer David Wells as a board member and has been in touch with Netflix for years, but discussions escalated recently, after Netflix said publicly that it would create an ad layer.
Last month, Netflix also announced that it intends to start charging higher rates to subscribers who have shared their account with multiple people.
“If you have a sister, let’s say, who lives in a different city — you want to share Netflix with her, that’s great,” Netflix COO Greg Peters said on the company’s earnings call. “We’re not trying to stop this sharing, but we’ll ask you to pay more so we can share with it.”
Mr Peters said the company will continue “within a year or so of iteration” to share the password before the plan is rolled out.
In the memo to employees, Netflix executives said the ad-supported tier will be introduced “along with our broader plans to charge for participation.”
Tiffany Hsu Contribute to the preparation of reports.
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