Well, that was fast. Just two months after a Netflix exec said it “doesn’t make sense” for the streaming giant to offer a cheaper ad-supported tier, the company now appears poised to do just that, and much sooner than anyone expected.
According to The New York Times, Netflix executives told staffers in a note that the company plans to unveil an ad-supported version “in the final three months of the year.” The newspaper also reports that the service will “begin cracking down on password sharing” within the same time period.
The news arrives just weeks after Neftlix told investors that it had lost 200,000 subscribers in the first quarter of 2022. The disastrous earnings report, which Netflix blamed on “sluggish economic growth,” sent the streamer’s stock price into a swan dive.
Netflix CEO Reed Hastings floated the idea of an ad-supported tier during last month’s bombshell earnings call, and the company also promised to figure out “how best to monetize” the widespread practice of password sharing.
Netflix has long scoffed at the idea of an ad-supported tier, particularly as its subscriber base surged during the (ongoing) pandemic.
As recently as March, Netflix CFO Spencer Neumann said “it’s hard for us to kind of ignore” the growing popularity of ad-supported streaming tiers, which have been recently served up by the likes of HBO Max and Disney+. However, he added that an ad-supported plan “doesn’t make sense for us” and that “it’s not in our plan.” Well, plans change, and in this case the change appears to have been swift.
While Netflix has been loath to jump on the ad bandwagon, it has been signaling a change in its formerly laissez-faire attitude on password sharing.
Around the same time that Netflix’s Neumann was pooh-poohing ads, the streamer announced a pilot plan that allows users to share their accounts for a discounted price. For now, the test is limited to Chile, Costa Rica, and Peru.
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