It’s official: Netflix is adding a lower-cost, ad-supported subscription plan to its service. This comes just months after the streaming service raised monthly subscription prices in the United States for all plans in order to “continue to offer a wide variety of quality entertainment options.”
Netflix CEO and CPO Greg Peters announced this on Wednesday. The company will work with Microsoft “as our global advertising technology and sales partner.”
“It’s very early days and we have much to work through,” Peters said. “But our long-term goal is clear. More choice for consumers and a premium, better-than-linear TV brand experience for advertisers. We’re excited to work with Microsoft as we bring this new service to life.”
This lower-priced, ad-supported plan will join the company’s basic, standard, and premium plans, which are all ad-free, according to Peters. Additional information, such as when and how much the plan will cost, was not immediately available.
According to The New York Times, Netflix informed employees in May that the company planned to launch a lower-cost, ad-supported plan in the fourth quarter of 2022.
It comes as no surprise. During its earnings call in April, Netflix reported its first loss of subscribers in more than a decade, sending the company’s stock plummeting.
Similar plans are available from Hulu and Peacock, and Disney+ is set to launch a similar offering later this year. Apple’s streaming service is ad-free, with the exception of promotions for its own content.
Netflix experiment
Netflix experimented with commercials in 2018. Referring to them as video promotions that appeared between episodes and movies. But also gave users the option to opt out of them.
Netflix CEO Reed Hastings has never been a fan of advertisements, seeing them as a distraction from the service’s entertainment value. Hastings previously described password sharing as “something you learn to live with.”
During a discussion of Quarterly earnings, Hastings stated that password sharing. Along with the streaming competition, is causing “lower acquisition and lower growth.” Netflix executives reported in a letter to shareholders earlier this year that more than 100 million households use a different household account.
“This is a big opportunity as these households are already watching Netflix and enjoying our service,” the letter read. Netflix executives also discussed how the company is testing new features to monetize password sharing.
Netflix stated in March that while features such as separate profiles and multiple streams available through its standard and premium plans have been “extremely popular,” they have caused “confusion about when and how Netflix can be shared.”
Two new features for members in Chile, Rica, and Peru will “enable members who share outside their household to do so easily and securely, while also paying a bit more.”
