Netflix co-founder and co-CEO Reed Hastings said on Tuesday’s earnings call that the company is “quite open to offering even lower prices with advertising, as a consumer choice” after years of rejecting calls for an ad-supported streaming tier.
If you’d like to know more, you’ll have to wait a few years and see what happens. A shift in strategy for Netflix, as Hastings acknowledges, would be “against the complexity of advertising and a big fan of the simplicity of subscription,” if the company were to implement an ad-supported model.
“Consumers who want to pay less but are willing to put up with advertising” are now being targeted by Netflix CEO Reed Hastings.
As of Tuesday, Netflix appeared more receptive to ideas it had previously rejected after reporting that it had lost subscribers for the first time in a decade. The value of Netflix stock fell by a quarter. Earlier this week, the company announced that its subscriber base had decreased in the first quarter of the year. In a decade, the most popular streaming television service saw its subscriber base shrink for the first time. In a statement, the company blamed Russia’s invasion of Ukraine for the quarter-over-quarter decline.
As of March 31, Netflix had 221.6 million subscribers, a slight decrease from the end of last year’s first quarter. Net income for the most recent quarter was $1.6 billion, down from $1.7 billion in the year-ago period for the tech company based in Silicon Valley. Following the release of the earnings results, Netflix shares fell by 25% to $262 in after-market trades.
Even if Netflix were to launch an ad-supported service, it wouldn’t be the first. Hulu, Peacock, and even HBO Max have plans that allow customers to pay less (or, in Peacock’s case, nothing) in exchange for having their shows occasionally interrupted. In addition, Disney has announced that by the end of the year, it will offer an ad-supported version of Disney Plus.
Netflix believes that the lack of affordable broadband internet service and smart televisions, as well as subscribers’ sharing their Netflix accounts with people who are not in their homes, is stifling its growth. As many as 222 million households are paying for Netflix, but more than 100 million other households don’t pay for the service, according to the streaming giant.
When it comes to monthly fees, Netflix currently charges Rs. 149 for the mobile plan, Rs. 199 for the basic plan, Rs. 499 for the standard plan, and Rs. 649 for the premium plan. While Netflix CEO Reed Hastings says he is proud of the company’s “price spread,” the company’s deep market penetration means that Hastings has limited options for increasing revenue other than raising prices. One way the company might increase its customer base and open up new revenue streams is by offering a free or low-cost tier that is supported by ads.