Netflix co-CEO Ted Sarandos confirmed today at the Cannes Lions Advertising Festival that Netflix plans to roll out a more affordable ad-supported tier to entice customers who opt for an ad-free plan up to $9.99 in advance. Don’t want to pay the price. Hollywood Reporter,
The plan is aimed at people who think Netflix is too expensive and don’t care about commercials, with no planned changes to current Netflix tiers. “We’ve taken a huge segment of customers off the table, people who say, ‘Hey, Netflix is too expensive for me and I don’t care about advertising,'” Sarandos said. “We are adding a level of ads; We are not adding ads to Netflix as you know it today. We’re adding a tier of ads for people who say, ‘Hey, I want a lower price and I’ll see ads.’ ,
Netflix is already in talks with ad sales partners, and while Sarandos didn’t provide details about when the ad-supported tier might come out, Netflix has told employees internally that it’s going to do so before the end of 2022. Targeting a release.
Netflix’s Basic plan costs $9.99 and offers 480p streaming, while the Standard plan costs $15.49 for 1080p resolution. Netflix’s most expensive Premium plan, which costs $19.99 per month, is the only tier that offers 4K HDR streaming. Netflix is the only streaming service that charges extra to improve streaming quality, and the ad-supported tier will provide the same streaming quality as the Basic plan.
In addition to offering an ad-supported tier, Netflix plans to crack down on account sharing. In select countries, Netflix is testing additional payments for people who share their Netflix accounts with people outside of their homes.
In the first quarter of 2022, Netflix said it lost subscribers for the first time in 10 years. Revenue growth “slowed significantly,” which the company attributed to “a large number of households sharing accounts” and “competition.” Netflix estimates that there are 222 million paying households sharing with an additional 100 million homes that are not being monetized. Netflix has confirmed that it plans to implement “more effective monetization of multi-home sharing” in the future.
Sarandos said he thinks Netflix can grow again with a change in plan. “We have a lot of scale, profitability and free cash flow to continue with this business,” he said, adding that “there’s still a lot of room.”