Netflix to Introduce Cheaper, Ad-Supported Subscription Plans

The world’s largest on-demand video streaming service Netflix plans to offer cheaper, ad-supported subscription plans to consumers over the next year or two. This comes on the heels of the news that the company reported a loss of 200,000 subscribers in the January-March quarter. It also saw their stocks plummet by 25%. The last time Netflix lost subscribers was in October 2011.

Reed Hastings, the CEO of Netflix has said that the company will introduce the ad-supported plans to give consumers more choice. The move will mark a major shift in Netflix’s previous policies on advertisements. Over its 25-years history, the company has been asked repeatedly whether it would consider including ads on its platform and the idea was always shot down.

However, Hastings has acknowledged the change today and said that the ad model has proven successful for rivals like Disney and Hulu. “Those who 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”, he added.

“Allowing users who would like to have a lower price and are advertising tolerant to get what they want makes a lot of sense,” Hastings said, adding that the company is not viewing the ad-supported model as a “short-term fix.”

Netflix offered a rather gloomy prediction for the spring quarter, forecasting that it might lose over 2 million subscribers in the coming months. This is despite the return of highly anticipated series like Stranger Things and the debut of the film The Grey Man starring Chris Evans and Ryan Gosling.

Netflix stated that the widespread password sharing, competition from other streaming giants, and the ongoing Russia-Ukraine war were some of the reasons why they did not a considerable rise in paid subscriptions. To increase the revenue, Netflix increased the price of its subscription plans in some countries, but the plan seemed to have backfired.

Currently, Netflix charges $10 a month for its basic tier, $15.49 for its standard tier, and $20 a month for its premium tier. These charges are relatively new since the company increased them in March.