What just happened? Having once said it had no plans to ever go down the ad-supported-tier route, Netflix co-CEO Ted Sarandos has now confirmed it will be offering such a plan as part of its service. According to reports, the streaming giant aims to roll out the new, cheaper options before the year is out.
"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 at the Cannes Lions advertising festival, via The Hollywood Reporter. "We [are] 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.'"
After rival streamer Disney+ announced in March that it would be introducing a cheaper, ad-supported tier to its US service later this year, Netflix Chief Financial Officer Spencer Neumann said his company wouldn't be doing the same as it didn't "make sense." He did add, however, "never say never."
Netflix softened its stance following the release of a Q1 financial report that showed it had lost subscribers (200,000 globally) for the first time in a decade. The company said at the time that it was "quite open" to offering lower prices with advertising, and could "figure it out over the next year or two." Now, Sarandos has confirmed that the trier is coming, with The New York Times reporting that it will be here before the end of the year.
Sarandos said Netflix was talking to companies about partnerships to help with its advertising business but wouldn't reveal who they were. According to The Wall Street Journal, Google and NBCUniversal are the top contenders.
Hulu, HBO Max, Paramount Plus and Peacock already have ad-supported tiers. With Disney+ joining the club later this year and Netflix tightening its belt through staff layoffs, it's little surprise to see the top streamer do the same. How much the tier will cost and how many ads will be shown per hour is still unknown, but with consumers cutting out luxuries as the cost of living rises, this will likely prove a smart move on Netflix's part.