Netflix co-CEO Ted Sarandos has confirmed that the streaming giant is working on adding a new ad-supported tier to its subscription offerings, as the company looks to shore up its subscriber base through a cheaper plan.
In an interview at the Cannes Lions advertising festival, as reported on by Hollywood Reporter, Sarandos said the company would add an ad tier because he believes Netflix 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’.
Netflix adding ad tier
“We are adding an ad tier; we are not adding ads to Netflix as it currently exists.”We’re introducing a new ad tier for people who say, “Hey, I want a lower price and I’ll watch ads.”
Netflix shares have fallen 30 percent following a worrying subscriber trend. In April, the company said it lost 200,000 subscribers in the first quarter of this year, the first time the streaming giant has seen such a big drop in numbers since 2011. Netflix projected that it would lose about 2 million subscribers by the end of the second quarter.
Cheaper ad-supported plan
The company had then announced it would be introducing a cheaper, ad-supported plan but this is the first time that Sarandos has confirmed it.
Not much is known about the plan and in a statement to Engadget, a company spokesperson said, “We are still in the early days of deciding how to launch a lower-priced, ad-supported option and no decisions have been made. So this is all just speculation at this point.”
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