Netflix Is Planning a Cheaper, Ad-Supported Subscription Plan
Netflix CEO Reed Hastings confirmed yesterday that the streaming service is set to introduce a cheaper, ad-supported subscription option.
As The Hollywood Reporter reports, confirmation came via Netflix's quarterly earnings call yesterday. On the call, Hastings said he's "been against the complexity of advertising, and a big fan of the simplicity of subscription," but admits, "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."
He goes on to state that the ad-supported model has already been proven to work for video streaming services, citing Hulu, Disney, and HBO as examples. Now Netflix is set to do the same, and it will work in a similar fashion to Hulu's setup, with a basic ad-supported plan costing significantly less than the ad-free subscription options.
Hulu charges $6.99/month ($69.99/year) for its ad-supported plan and $12.99/month for no ads. Netflix's Standard plan is $15.49, so an ad-supported plan will likely be priced around the $8 mark. However, Netflix also has a Basic $9.99 plan which doesn't allow HD streaming. Could we see Netflix introduce a $5/month ad-supported tier without HD, too?
Don't expect Netflix to introduce an ad-backed tier anytime soon, though. The company intends to investigate what works best "over the next year or two." Hastings also said Netflix will not be using data-tracking and ad-matching when this new tier launches.
The decision to embrace ads comes after Netflix saw a drop in subscriber numbers for the first time in 11 years. The company also believes 100 million households are currently freeloading through password sharing.
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