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Netflix Confirms Plans for Less Expensive Ad-Supported Options

Netflix CEO Ted Sarandos confirms at the Cannes Lions advertising festival, plans to introduce an ad-supported tier with a lower subscription cost.

Netflix CEO Ted Sarandos recently confirmed there are plans for the streaming service to introduce an ad-supported tier with a lower subscription cost.

Speaking at the Cannes Lions advertising festival, Sarandos said, “We’ve left a big customer segment off the table, which is people who say: ‘Hey, Netflix is too expensive for me and I don’t mind advertising.'” Sarandos said. “We adding an ad tier; we’re not adding ads to Netflix as you know it today. We’re adding an ad tier for folks who say, ‘Hey, I want a lower price and I’ll watch ads.'”

RELATED: Netflix Announces Gudetama Adaptation, Starring a Lazy Egg

Reports of an ad-supported tier emerged earlier this year. When asked about plans, Netflix CFO Spencer Neumann said in March, “Never say never… It’s not like we have religion against advertising, to be clear. We lean into consumer experience, consumer choice, and what’s great for our creators and storytellers. [Advertising is] not something that’s in our plans right now. We have a great model in the subscription business. It scales globally.”

This came shortly after it was reported Netflix had failed to reach its subscriber target for Q4 2021. The streaming service had added 8.28 million subscribers, below the company’s 8.5 million projection and Wall Street’s 8.3 million estimate. It was also expecting a weaker performance in Q1 2022 owing to pandemic concerns and growing competition. Netflix has evidently considered a variety of options to bolster earnings. In 2022, the streaming service test launched additional fees to tackle password sharing, which it had previously turned a blind eye to.

RELATED: Netflix Plans to Release Bigger, More Expensive Movies, But Fewer Films Overall

It should be noted Netflix is not the first streaming service to announce plans for an ad-supported tier. Disney+ confirmed plans for an ad-tier in March. Kareem Daniel, Chairman, Disney Media and Entertainment Distribution, stated back then, “Expanding access to Disney+ to a broader audience at a lower price point is a win for everyone – consumers, advertisers, and our storytellers… More consumers will be able to access our amazing content. Advertisers will be able to reach a wider audience, and our storytellers will be able to share their incredible work with more fans and families.”

Commenting on the announcement, CEO and Co-Founder Ashwin Navin, an insights and analytics company, stated, “Netflix’s entry into the advertising game instantly changes the CTV landscape and signals a win for consumers, advertisers, as well as its own bottom line. Creating a new ad-supported tier provides consumers with greater choice and flexibility in the marketplace. This move is also a boon for advertisers, unlocking unprecedented amounts of new inventory while creating arguably the largest single influx of ad inventory in the history of television advertising. Finally, embracing an ad model is ultimately a win for Netflix, as it generates an entirely new revenue stream and monetizes password sharing.”

Source: The Hollywood Reporter

Narayan Liu (/Nəraɪʌn Lɪʊ/ in IPA) is a contributing features and news writer, and junior editor at CBR. From Hong Kong, currently based in Sweden. Nowadays Narayan writes about films, TV shows, comic books and video games, or about anything related to The Witcher. He does this while studying language, culture, and communication at Linnaeus University. You can follow him on his blog (narayanliu.wordpress.com), on Twitter (@Narayan_Liu) or contact him directly at Narayan(dot)Liu(at)gmail.com.

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