Netflix co-CEO Ted Sarandos confirmed that the company plans to offer an ad-supported subscription for the streaming service in an interview at the Cannes Lions Advertising Festival .
The New York Times reported last month that the company aims to roll out the new subscription by the end of 2022. Sarandos said: “We have excluded a large segment of customers who say the subscription is too expensive for them and do not mind the presence of ads. We are adding an ad-supported subscription. We do not add advertisements to the service you know. We’re even adding a new ad-supported subscription for people who want a lower price while accepting ads.
The streaming service had been widely expected to launch an ad-supported subscription class for its service since co-CEO Reed Hastings said in April that he might be open to the idea.
Netflix plans to launch a new, cheaper subscription after news it lost subscribers for the first time in more than a decade last quarter.
The company recorded a loss of 200,000 subscribers in the first quarter of 2022 compared to the fourth quarter of the previous year.
It is still the largest streaming service with nearly 222 million subscribers. But the loss forced her to rethink her historically hard line against advertising.
The question now revolves around the advertising sales company that Netflix is partnering with to help it enter the advertising field.
Earlier this month, the Wall Street Journal reported that NBCUniversal and Google were two of the biggest contenders.
Sarandos did not say with whom she might be involved. “We are in talks with all of them now,” he said. But it was suggested that the company could use the partnership as a temporary measure while creating its advertising activity.
Netflix closes 300 jobs after losing subscribers
The company may become a target for acquisition due to the declining share price. But the executive made clear that Netflix has everything it needs to return to growth.
He also denied recent rumors that the company might be looking to buy a streaming hardware company like Roku. We don’t need it, Sarandos said.
Netflix’s plans for a cheaper ad-supported subscription mirror those of rival Disney Plus, which also hopes to launch a similar subscription by the end of the year.
The ad-supported Disney Plus subscription comes to the US first, before expanding internationally in 2023. The company also plans to limit ads to four minutes per hour. The prices of the new Netflix and Disney Plus subscriptions have not yet been announced.
In a related development, Netflix cut about 300 jobs as part of the second round of layoffs. The company previously laid off about 150 employees and dozens of contractors in May.
The layoffs affect many different teams, most of whom are based in the United States, the company said. Besides eliminating international jobs as well. As we continue to invest heavily in the business, we have made these adjustments so that our costs grow in line with our slower revenue growth.