In an interview at the Cannes Lions advertising festival, Ted Sarandos, co-CEO of Netflix, said that the business intends to launch an ad-supported tier to its streaming service, according to The Hollywood Reporter. The corporation intends to introduce the new tier by the end of 2022, according to a story published by The New York Times last month.
People who claim that Netflix is too costly for them but don’t mind advertisements make up a sizable portion of the market that we’ve overlooked. stated Sarandos. “We [are] not bringing commercials to Netflix as you know it today; we [are] creating an ad tier. For people who say, “Hey, I want a cheaper price and I’ll watch advertisements,” we’re launching an ad tier.
Since its other co-CEO Reed Hastings said in April that he would be open to the concept, the streaming service has been widely anticipated to introduce an ad-supported subscription tier for its service.
Following reports that it lost members for the first time in more than a decade last quarter, Netflix announced plans to provide a new, more affordable tier. Comparing the first quarter of 2022 to the fourth quarter of the previous year, the firm recorded a loss of 200,000 customers. With over 222 million customers, it continues to be the biggest streaming service, but the decline has made Netflix reevaluate its hitherto staunch opposition to advertisements.
The matter at hand is which ad-sales company Netflix will collaborate with in order to support its entry into the advertising industry. The Wall Street Journal reported earlier this month that Google and NBCUniversal were two of the leading candidates. A collaboration may be used by Netflix as a temporary solution while it develops its own ad business, Sarandos hinted when questioned about potential partners during the Cannes interview (“We’re talking to all of them right now,” he added).
Sarandos was also questioned about the possibility of a takeover due to Netflix’s plummeting stock price. It is “always a reality,” the CEO said, adding that the firm has all it needs to resume growing on its own. He also denied recent suggestions that Netflix would be interested in acquiring a provider of streaming devices similar to Roku. According to the WSJ, Sarandos stated, “We don’t need it.”
Netflix’s ambitions for a less expensive, ad-supported tier are similar to those of Disney Plus, a competitor that also intends to provide a comparable service by the end of the year. Prior to becoming global in 2023, Disney’s ad-supported tier will launch in the US, with four minutes of advertising per hour being the maximum. Pricing has not yet been disclosed for the new Netflix and Disney levels.