Netflix may introduce its low-level ad-supported level by the end of the year, a faster time than originally indicated, the company told employees in a recent note.
In a note, Netflix executives said they were seeking to introduce an advertising level in the last three months of the year, according to two people who shared details of the communication, speaking on condition of anonymity to describe the company’s internal discussions. The note also said that they plan to start the fight against the exchange of passwords among their subscriber base at about the same time.
Last month, Netflix stunned the media industry and Madison Avenue when it revealed it would start offering cheaper subscriptions with advertising, after years of publicly declaring that commercials would never be seen on the streaming platform.
But Netflix is facing significant business challenges. Announcing earnings for the first quarter last month, Netflix said it lost 200,000 subscribers in the first three months of the year – for the first time in ten years – and expected losses of another two million in the coming months. Since the subscriber’s announcement, Netflix’s share price has plummeted, destroying the company’s approximately $ 70 billion market capitalization.
Reed Hastings, co-executive director of Netflix, told investors that the company would explore the possibility of implementing a platform with advertising support and would try to “figure it out over the next year or two.”
A recent note to staff indicates that the deadline has accelerated.
“Yes, it is fast and ambitious, and it will require some compromises,” the note said.
A Netflix spokeswoman declined to comment.
Netflix currently offers different payment levels to access its streaming service; his most popular plan costs $ 15.49 a month. A new level with advertising support will cost less. Other streaming services have similar plans. HBO Max, for example, offers a non-commercial service for $ 15 a month and charges $ 10 a month for a service with advertising.
Indeed, in a note for employees, Netflix executives reminded their competitors, saying that HBO and Hulu were able to “maintain strong brands by offering advertising services.”
“Every major streaming company, with the exception of Apple, has or has announced an ad-supported service,” the note said. “No wonder people want options at a lower price.”
Last month, Netflix also announced that it intends to start charging higher prices for subscribers who share their account with multiple people.
“So if you have a sister, let’s say she lives in another city; you want to share Netflix with her, that’s great, ”said Greg Peters, Netflix’s chief operating officer, during a call about the company’s earnings. “We’re not trying to close this exchange, but ask you to pay a little more to be able to share with her.”
Mr Peters said the company would hold an “it or so iteration” on the password exchange before it deployed the plan.
In a note to employees, Netflix executives said that the level of advertising support for the streaming platform will be introduced “in tandem with our broader plans to charge sharing fees.”