Streaming giant Netflix has officially confirmed the rumours that it would be introducing ads to the platform.
The news, which was originally leaked in May, was confirmed by the company’s Co-CEO Ted Sarandos.
However, the news isn’t all bad. Netflix has stated that they are introducing a second subscription tier that is cheaper than the existing tier, but will feature ads as a compromise.
“We’ve left a big customer segment off the table, which is people who say: ‘hey, Netflix is too expensive for me and I don’t mind advertising. We’re adding an ad-tier, we’re not adding ads to Netflix as you know it today. We’re adding an ad tier for folks who say ‘hey, I want a lower price and I’ll watch ads,’” said Sarandos.
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Earlier in the year, the company had been quite indecisive around the prospect of introducing ads to the platform. Netflix CFO Spencer Nuemann said that the company would “never say never” when asked about ads back in March, before following up with that it’s “not something in [Netflix’s] plans right now.”
However, on April 20th, the company’s other Co-CEO, Reed Hastings, said that Netflix was “quite open” to the idea of releasing a cheaper, ad-based subscription for their service. However, the tier is coming much quicker than expected, as Hastings said the idea could be figured out “over the next year or two.”
The introduction of the new tier is likely a rapid response to the company’s announcement that this year, it had a net loss in subscribers for the first time and had lost 200,000 subscribers and over $101 billion ($70 billion USD) by April.
Ad supported subscription is not a new idea either. Rival streaming services such as Hulu, HBO Max, Paramount Plus have already implemented the concept, whilst Disney Plus have already announced it will introduce ad-supported subscriptions later this year.
Currently, there is no news on when the new tier will be introduced, or what it will cost
