Netflix has so far shied away from showing ads on its platform, and unlike many other streaming services, it does not offer a cheaper ad-supported tier. However, that reportedly will change by the end of the year.
The streaming service is also looking to end password sharing around the same time. So, if you have been leeching off your ex-girlfriend’s Netflix account, know that it won’t last long.
Streaming wars heat up
The reported changes come as Netflix faces stiff competition from an increasing array of streaming services and a surprising decline in subscribers. Although Netflix still dominates, upstarts like Disney+ and Hulu made serious headway in the streaming wars during COVID-19 lockdowns.
Even latecomer Apple TV+ is coming on strong, winning awards and carving out some space in pop culture with movies like CODA (which won this year’s Oscar for Best Picture) and hit shows like Ted Lasso, Severance and Shining Girls.
The shifting streaming landscape apparently has Netflix executives scrambling to regain the service’s mojo. The New York Times reports that an internal note to Netflix employees laid out a plan to introduce an ad-supported tier in the last quarter of 2022, among other measures.
The move came after the company reported its first-ever decline in subscribers in the first quarter of 2022. Worse, Netflix further expects to lose up to 2 million subscribers in the coming months.
Ad-supported tier could stop Netflix subscriber loss
While multiple factors contributed to the decline in subscribers, the drop came after Netflix hiked its U.S. subscription prices at the beginning of 2022. The basic plan that lets you watch content on any one screen in non-HD quality starts at $9.99, while the Standard plan with HD streaming is priced at $15,49. The Premium plan with 4K streaming and the ability to watch content on up to four devices simultaneously costs $19.99 — making it the most expensive option among all streaming services.
During the Q1 2022 earnings call, Netflix co-CEO Reed Hastings indicated that the company was exploring an ad-supported option and that it would “figure it out over the next year or two.” However, the internal note suggests a much more aggressive timeline for launching an ad-supported tier.
While there’s no word on how much Netflix will charge for its ad-supported plan, Hastings did compare the upcoming tier to its competitors and noted that they have been able to “maintain strong brands while offering an ad-supported service.”
The time to pay for Netflix is finally coming
In the same note, Netflix executives also made it clear that they will finally start cracking down on password sharing. The company intends to start charging people for sharing their Netflix account around the same time it debuts the ad-supported tier. The company touched on this topic in its Q1 earnings call but did not give a clear timeline on when it would take action against the practice.
If priced right, the cheaper, ad-supported Netflix tier could be a viable option for users who have been using the streaming service for years and have never paid for it.