Netflix’s co-CEO Ted Sarandos has confirmed that the company plans to introduce an ad-supported tier to its streaming service. According to reports, Netflix is planning to launch the new tier by the end of 2022.
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“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,’” Sarandos said. “We are 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.’”
It has been an idea floating around for years, with Netflix denying it will ever launch such subscription tier until earlier in the year. It comes after the company reported its first loss in subscriber numbers in its streaming history this past quarter, losing 200,000 subscribers across its territories. It remains the largest streaming service with roughly 222 million subscribers, but the loss has forced Netflix to rethink its historically hardened stance against ads.
What is yet unknown is with which ads agency the company will partner and how it envisions its ad platform to work. Will it play ads during the episodes of a show, or simply before and after? Will it have pop-up ads like used on YouTube? The latter might be possible as Google is one of the top contenders to support the ad platform, according to the Wall Street Journal. It is expected that Netflix will eventually build out its own ad business.
Netflix’s plans for a cheaper, ad-supported tier, mirror those of rival Disney Plus, which also hopes to launch a similar offering by the end of the year. Disney’s ad-supported tier will come to the US first, before expanding internationally in 2023, and the company plans to limit ads to four minutes per hour. Pricing for both Netflix and Disney’s new tiers is yet to be announced.
