What you need to know
- Netflix confirms it is introducing an ad-supported tier to the platform.
- It will be available for users who want to enjoy Netflix at a lower price by watching ads.
- The move comes after the recent loss of 200,000 subscribers and price increases.
Netflix is working on an ad-supported tier, which means the streaming platform will eventually allow ads. On Thursday, the company's Co-CEO Ted Sarandos confirmed this while speaking at the Cannes Lions advertising festival, (via Hollywood Reporter).
Netflix has always opposed ads on its platform since its inception and never implemented them. It thus explains its platform's premium pricing compared to the competition, many of which already have their own ad-supported tiers to keep costs low. However, a new ad-supported tier for Netflix could succeed at bringing new customers to the platform as the streaming market becomes increasingly saturated.
According to Holywood Reporter, Sarandos suggests that the company has left out a significant customer base who believes the streaming service is too expensive for them. He believes that the consumer base wouldn't mind ads on the streaming platform if it means paying less money.
This move comes right after the company reported a loss of 200,000 subscribers in the first quarter of this year, its first subscriber loss in a decade. In April, co-founder and co-CEO, Reed Hastings, said that the company was exploring introducing ads to the platform.
Sarandos clarifies that this would be a new tier and that ads aren't taking over the platform, meaning the more expensive plans will likely remain as they are (at least until the next price hike).
Hollywood Reporter says that Sarandos is in talks with ad-sales partners who could help generate revenue by placing ads on the streaming service.
Reports have recently speculated that Netflix could eye Roku as a potential takeover target. The company, which makes some of the best streaming devices on the market, actually got its start as a Netflix and was spun off in its early days.
As noted by our Shruti Shekar, a Roku-Netflix partnership would potentially help the streaming platform get a new audience, revenue stream, and infrastructure for the reportedly planned ad-tier service.
Sarandos, however, has declined to comment when asked about the potential buyout of Roku by Netflix, simply responding with, "We don't need it," according to The Wall Street Journal.
