Netflix will roll out an ad-supported subscription tier by the end of 2022, it was revealed yesterday (9 May).
The New York Times reports that Netflix executives have told employees they hope to introduce a lower-cost ad-supported tier by the end of the year, a much more accelerated timeline than previously announced.
Things moved very quickly for Netflix, given that in early March the company’s CFO, Spencer Neumann, only went so far as to say he could “never say never” when asked him about the idea of introducing ads on Netflix and went that far. as clarifying that the move was “not something in [the brand’s] plans right now.”
Then, on April 20, during an earnings call, Netflix boss Reed Hastings revealed that the streaming service was then “pretty open” to the possibility of an ad-supported tier. This was after he was previously quoted as suggesting that an ad-supported offering would be something Netflix could “figure out over the next year or two.”
“Fully open” has now apparently moved on to “what’s definitely going on”, and Neumann’s “not yet” appears to only last until October…
The news comes at the same time as it was confirmed that Netflix will start cracking down on password sharing later this year.
The streaming giant is making the move as it seeks to shore up its revenue. It announced in late April that it had lost 200,000 subscribers since the start of 2022 and, as a result, saw its value drop by more than $50 billion.
The announcement saw Netflix cancel a slew of shows, park many of their projects in development, including one by Prince Harry and Meghan Markle, and shut down Tudum, the streaming giant’s editorial presence.
A lower ad-supported pricing tier is not a revolutionary idea for a subscription service. Hulu, HBO Max, Paramount Plus and Peacock already do this and Disney Plus will offer the option this year, the reason it’s a surprise is because the top brass at Netflix were adamant weeks ago, that was just an idea…
Analysis: Is Netflix panicking?
There is a bit of panic. It’s just to say. Netflix’s change of heart was quick and, coupled with its new crackdown on password sharing, it suggests the company is struggling somewhat.
Giving subscribers a cheaper option is never a bad thing, and it’s far better to save money by laying off employees and canceling shows. Things seem to be moving so fast for Netflix, every day seems to bring new drama, and this announcement isn’t going to help matters.
A quiet period and maybe a few show renewals would help. Let’s wait and see…