Netflix would be . to be able to introduce lower priced ad-supported tier by the end of the year, a faster timeline than originally stated, the company told employees in a recent note.
In the note, Netflix executives said they aim to introduce the ad tier in the last three months of the year, according to two people who shared details of the communication and spoke on condition of anonymity to describe internal company discussions. The note also said they planned to start sharing passwords among the subscriber base around the same time, the people said.
Last month, Netflix stunned the media industry and Madison Avenue when it revealed it would be offering a cheaper subscription plan with ads, after years of publicly declaring that commercials would never be seen on the streaming platform.
But Netflix faces major business challenges. when announcing first quarter profit Last month, Netflix said it lost 200,000 subscribers in the first three months of the year — the first time it’s happened in a decade — and is expected to lose another two million in the coming months. Since the subscriber announcement, Netflix’s stock price has plummeted, wiping out about $70 billion of the company’s market cap.
Netflix’s co-chief executive, Reed Hastings, told investors that the company would explore the possibility of introducing an ad-supported platform and that it would try to “find it out in the next two years.”
The recent note to staff indicated that the timeline has accelerated.
“Yes, it is fast-paced and ambitious and will require some compromises,” the note said.
A Netflix spokeswoman declined to comment.
Netflix currently offers different payment tiers to access its streaming service; the most popular plan costs $15.49 per month. The new ad-supported tier costs less. Other streaming services have similar plans. For example, HBO Max offers an ad-free service for $15 a month, and charges $10 a month for the ad-free service.
In the note to employees, Netflix executives called out their competitors, saying HBO and Hulu have been able to “maintain strong brands while providing an ad-supported service.”
“Every major streaming company except Apple has or has announced an ad-supported service,” the note said. “People want cheaper options for good reason.”
Last month, Netflix also announced that it plans to start charging higher prices for subscribers who share their accounts with multiple people.
‘So if you have a sister, say, she lives in another city; you want to share Netflix with her, that’s great,” Netflix Chief Operating Officer Greg Peters said during the company’s earnings call. “We’re not trying to stop that sharing, but we’re going to ask you to pay a little more to to share with her.”
Peters said the company would “repeat a year or so” on password sharing before rolling out a plan.
In the note to employees, Netflix executives said the ad-supported tier for the streaming platform would be introduced “in conjunction with our broader plans to charge for sharing.”
