Netflix could introduce its lower-priced ad-supported tier by the top of the 12 months, a more accelerated timeline than originally indicated, the corporate told employees in a recent note.
Within the note, Netflix executives said they were aiming to introduce the ad tier in the ultimate three months of the 12 months, said two individuals who shared details of the communication on the condition of anonymity to explain internal company discussions. The note also said Netflix planned to start cracking down on password sharing amongst its subscriber base around the identical time, the people said.
Last month, Netflix stunned the media industry and Madison Avenue when it revealed that it will begin offering a lower-priced subscription featuring ads, after years of publicly stating that commercials would never be seen on the streaming platform.
But Netflix is facing significant business challenges. In announcing first-quarter earnings last month, Netflix said it lost 200,000 subscribers in the primary three months of the 12 months — the primary time that has happened in a decade — and expected to lose two million more within the months to come back. Because the subscriber announcement, Netflix’s share price has dropped sharply, wiping away roughly $70 billion in the corporate’s market capitalization.
Reed Hastings, Netflix’s co-chief executive, told investors that the corporate would examine the potential of introducing an advertising-supported platform and that it will attempt to “figure it out over the subsequent 12 months or two.”
The recent note to staff signaled that the timeline has sped up.
“Yes, it’s fast and bold and it’ll require some trade-offs,” the note said.
A Netflix spokeswoman declined to comment.
Netflix offers quite a lot of payment tiers for streaming access; its hottest plan costs $15.49 a month. The brand new ad-supported tier will cost less. Other streaming services have similar plans. HBO Max, as an illustration, offers a commercial-free service for $15 a month, and charges $10 a month for the service with promoting.
Indeed, within the note to employees, Netflix executives invoked their competitors, saying HBO and Hulu have been capable of “maintain strong brands while offering an ad-supported service.”
“Every major streaming company excluding Apple has or has announced an ad-supported service,” the note said. “For good reason, people want lower-priced options.”
Last month, Netflix also announced that it intended to start charging higher prices to subscribers who shared their account with several people.
“So if you happen to’ve got a sister, let’s say, that’s living in a unique city — you wish to share Netflix together with her, that’s great,” Greg Peters, Netflix’s chief operating officer, said on the corporate’s earnings call. “We’re not attempting to shut down that sharing, but we’re going to ask you to pay a bit more to find a way to share together with her.”
Mr. Peters said the corporate would go “through a 12 months or so of iterating” on password sharing before it rolled out a plan.
Within the note to employees, Netflix executives said the advertising-supported tier could be introduced “in tandem with our broader plans to charge for sharing.”
