Ads will interrupt shows streaming on Netflix but will lower the price of subscription

Netflix is planning to offer a subscription that will have ads. The ad-supported subscription should, however, have a lower price.

Netflix co-CEO Ted Sarandos has confirmed the streaming company would begin testing an ad-supported subscription plan. It seems Netflix is talking with companies including, but not limited to, Comcast, and Google.

An internal memo that leaked last month, had strongly suggested Netflix was planning to launch an ad-supported subscription tier during the “last three months of the year.” The company had steadfastly denied rumors about introducing ads as they hinder the viewing experience, but it seems to have taken a U-turn.

Netflix was compelled to introduce ads because it was leaving out a huge demographic, suggested Sarandos:

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,’. We’re adding an ad tier for folks who say, ‘Hey, I want a lower price and I’ll watch ads.

The co-CEO has stressed that “Netflix as you know it today” won’t change. In other words, ads won’t appear in any of the subscriptions that currently exist. Instead, the streaming company will introduce a new subscription tier. This package will contain ads, and will also be priced comparatively lower.

Netflix co-CEO Reed Hasting had indirectly confirmed the arrival of a subscription subsidized by advertisements last month when he said:

Those who have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription. But as much as I’m a fan of that, I’m a bigger fan of consumer choice. And allowing consumers who like to have a lower price, and are advertising tolerant, to get what they want makes a lot of sense.

Netflix is facing strong competition. It is losing subscribers. Moreover, most of the company’s competitors already offer ad-supported plans that are cheaper than their ad-free subscriptions. The cheapest Netflix subscription currently costs $9.99 in the US. It is not clear if Netflix will price the ad-supported subscription below $10.

Source: Hollywood Reporter

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