Netflix plans to offer a cheaper and ad-supported plan to consumers within a year or two, the world’s largest streaming service said, as it pushes to tap a wider set of potential customers.
The firm, which reported a loss of 200,000 subscribers in the first quarter, will introduce the ad-supported plan to give customers more choice, company’s co-chief executive Reed Hastings said at the earnings call Tuesday.
The upcoming ad-supported plan, marks a major shift in how Netflix has previously viewed advertisement in its 25-year history. Hastings acknowledged the major move, saying the model has matured enough and proven successful for rivals such as Hulu. “We don’t have any doubt that it works,” he said.
“Those who have followed Netflix know that I have been against the complexity of advertising and a big fan of the simplicity of subscription,” he said. “But I am a bigger fan of consumer choice. Allowing consumers who would like to have lower price and are advertising tolerant get what they want they want makes a lot of sense.”
Netflix, which reported its first subscriber loss in more than a decade, is not viewing an ad-supported model as a “short-term fix,” Hastings said.
“In terms of the profit potential, definitely the online ad market has advanced and now you don’t have to incorporate all the information about people that you used to. So we can be a great publisher and have other [companies] do all the fancy ad-matching and integrate all the data about people. So we can stay out of that.”
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