With its share price on the slide after losing 200,000 subscribers and facing increased competition from the likes of Disney+, Paramount Plus, Hulu, and even Apple TV Plus to name just a few, Netflix has confirmed that there are some big changes coming down the pipeline. Besides cracking down on password sharing as mooted earlier this year, the streaming service will also introduce an ad-supported tier, possibly before the end of the year.
In an interview with WSJ (paywall), Netflix’s Co-Chief Executive, Ted Sarandos, stated that Netflix was working on a new tier that would be supported by ad revenue. It’s likely to follow a similar path to Hulu’s plans, whereby the ad-supported tier is a little cheaper than the Hulu-Plus ad-free plans. Just how much cheaper has yet to be revealed, but you would hope it would be more than a couple of dollars difference. Whatever the difference is, Netflix could eschew the likes of Google, Facebook, and Amazon and build its own ad business in the future, which would mean it could keep the whole pie for itself.
According to The New York Times (paywall), Netflix execs sent out a note to employees notifying them of the company’s intentions of rolling out the ad-supported tier before the end of 2022, with a similar timeline for the crackdown on those sharing passwords. It’s unclear just how Netflix plans to go after these password sharers, but it will likely involve some sort of geo-location restriction technology.
Whatever happens, it’s clear that Netflix isn’t taking this first ever downturn in subscriber numbers lying down and that it plans to maintain growth by appealing to those with smaller budgets (which could be most people these days) and squeezing more cash out of those who are sharing accounts.
