Netflix plans to launch cheaper ad-supported plans to subscribers

Streaming platform Netflix is set to introduce an advertising-supported subscription offering.

During the company’s quarterly earnings call in the US on Tuesday, the CEO of Netflix said the company is open to an advertising supported subscription model in the near future after years of rejecting calls for an ad-supported streaming tier.

“One way to increase the price spread is advertising on lower priced plans. Those who have been following Netflix know that I have been against the complexity of advertising and a fan of the simplicity of subscription,” said Hastings. “But I’m a bigger fan of consumer choice and allowing consumers who would like to have a lower price and are advertising tolerant get what they want.”

Hastings added: “The online ad market has advanced and you don’t have to incorporate all the information about people that you used to. We can be a great publisher and have other people do all of the fancy ad-matching and integrate all the data so we can stay out of that and be focused on our members and create a good experience.”

In a statement, Netflix said it ended the first quarter with 200,000 fewer subscribers than it had in the fourth, missing on its own projection of adding 2.5 million customers in the period. As it stands, Netflix has 221.64 million global subscribers.

The company blamed password sharing among its members and increased streaming competition for pressuring revenue growth

And revenue was below expectations at $US7.868 billion (A$ 10.601 billion) for the three month period.

Last month, Disney’s global streaming platform, Disney+ introduced an advertising-supported subscription offering globally in 2023, after first being launched in the United States by the close of 2022.

“It’s pretty clear that it’s working for Hulu, Disney, HBO. I don’t think we have a lot of doubt about this work. I think we’ll just get in and figure it out as opposed to testing it.

“It would be a plan layer. If you still want a plan-free option you’ll still have that. But if you’d rather pay a lower price and are ad tolerant, we’re going to cater to you also,” added Hastings.

Last year, new research conducted by global technology company Criteo revealed 56% of Australians are happy to watch ads on video streaming services if it means they save money.

A quarter of Australians (24%) said they are open to watching ads if they didn’t have to pay the subscription fee for video streaming services.

The research also cited that “one-in-five Australians (20%) are willing to share their data with advertisers to receive more relevant and personalised video ads,” with the Australia’s top five favourite streaming services in Australia being Netflix (74%), YouTube (53%), 7Plus (44%), ABC iView (36%) and Disney+ (33%).


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