Netflix could introduce it cheapest level supported by advertising by the end of the year, a faster timeline than originally indicated, the company told employees in a recent statement.
In the note, Netflix executives said they aimed to introduce the advertising tier in the last three months of the year, according to two people who shared the details of the communication, speaking on condition of anonymity to describe the company’s internal discussions. The note also stated that they were planning to start cracking down on password sharing among its subscriber base around the same time, people said.
Last month, Netflix stunned the media industry and Madison Avenue when it revealed it would begin offering a lower-priced subscription with advertisements, after years of publicly claiming that commercials would never be seen on the platform. streaming.
But Netflix is facing significant business challenges. In announcing first quarter earnings last month, Netflix said it had lost 200,000 subscribers in the first three months of the year – the first time this has happened in a decade – and expected another two million in the coming months. Since the subscriber announcement, Netflix’s share price has dropped dramatically, wiping out about $ 70 billion of the company’s market capitalization.
Reed Hastings, co-chief executive of Netflix, told investors that the company would be looking into introducing an ad-supported platform and would try to “figure it out in the next year or two.”
The recent note to staff signaled that the timeline has accelerated.
“Yes, it’s fast and ambitious and will require some compromises,” the statement said.
A Netflix spokesperson declined to comment.
Netflix currently offers a variety of payment levels to access its streaming service; its most popular plan costs $ 15.49 per month. The new ad-supported tier will cost less. Other streaming services have similar plans. HBO Max, for example, offers an ad-free service for $ 15 per month and charges $ 10 per month for the ad-supported service.
Indeed, in the employee note, Netflix executives summoned their competitors, claiming that HBO and Hulu were able to “maintain strong brands while offering an ad-supported service.”
“All major streaming companies, excluding Apple, have or have announced an ad-supported service,” the statement read. “For good reason, people want low-priced options.”
Last month, Netflix also announced plans to start charging higher prices to subscribers who share their account with more people.
“So if you have a sister, let’s say, she lives in another city; if you want to share Netflix with her, that’s great, “Netflix chief operating officer Greg Peters said during the company’s earnings call.” We’re not trying to stop that sharing, but we’ll ask you to pay a little more. to be able to share with her “.
Peters said the company would “go through about a year of iterations” on sharing passwords before rolling out a plan.
In the employee note, Netflix executives said the ad-supported tier for the streaming platform would be introduced “in tandem with our broader plans to charge for sharing.”