Following an increase in the monthly charge for subscribers earlier this year, the firm is considering advertising.Netflix is considering ad-supported price tiers in the first quarter of 2022, following its first membership decline in a decade and a more competitive streaming market. During the company’s quarterly investors’ earnings interview on Tuesday, co-CEO Reed Hastings mentioned the perspective shift.
Hastings stated that Netflix is looking at methods to offset the cost for subscribers after COO Greg Peters addressed the recent price rise for membership tiers. Netflix would be one of the last major streaming providers to enter the ad market if it does so.
“One way to increase the price spread is advertising on low-end plans,” Hastings said. He said that he was previously opposed to letting in marketers, but that he has subsequently altered his mind in favor of customer choice.
“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. “Think of us as quite open to offering even lower prices with advertising as a consumer choice.”
Netflix’s objective, based on how it provides film, television, and gaming content, is to provide greater value to customers while also allowing marketers to access audiences that are interested in their products. Instead of going through a testing period, Hastings believes the corporation will go right in.
“It is pretty clear that it is working for Hulu. Disney is doing it. HBO did it. I don’t think we have a lot of doubt that it works,” he said. “All those companies have figured it out. I’m sure we’ll just get in and figure it out.”
Hastings compared the planned pricing to Hulu, which allows subscribers to choose between higher-priced, ad-free subscriptions and a lower subscription that includes ads. One significant distinction is that Netflix will not participate in data tracking.
There is no set date, but it is on the table to be looked into — and may be implemented — in the next year or two. Only a few large streaming services, such as Netflix and Apple TV Plus, are free of ad interruptions.