Netflix will launch lower-cost, ad-supported streaming plans

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Netflix, after years of insisting it would stick solely to subscription-only plans, is finally open to experimenting with lower-cost, ad-supported packages, co-CEO Reed Hastings said on the company’s Q1 earnings interview.

The company expects to nail down its ad-supported streaming strategy over the next year or two, Hastings said, "but think of us as quite open to us offering even lower prices with advertising as a consumer choice."

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Netflix CEO Reed Hastings. (Getty Images / Getty Images)

Hastings’ comments about Netflix planning to intro an ad-supported plan come as the company’s subscriber growth has hit a wall — in fact, Netflix lost 200,000 subs in the first three months of 2022 and expects to drop 2 million in Q2. Adding ad-supported options could give it a new pathway to growth; in addition, to boost the top line, Netflix is looking at ways to collect money from the estimated 100 million-plus households that currently use a shared password to stream without paying for it.

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

Hastings didn’t provide details on what Netflix’s ad-supported plans might cost. The streamer’s standard two-stream HD plan costs $15.49 per month in the U.S.

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With its advertising play, Netflix can avoid wading into data-privacy pitfalls that have become headaches for some internet companies by using technology that matches ads with viewers without needing to track personally identifiable information, Hastings said.

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Last month, Netflix CFO Spencer Neumann signaled the streamer’s willingness to consider adopting an ad-supported tier. "It’s not like we have religion against advertising, to be clear," Neumann said at a Morgan Stanley’s investment conference. While "that’s not something that’s in our plans right now," he said, "never say never."

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