Reed Hastings, co-CEO of Netflix, said Tuesday that the company is now offering lower-priced tiers with ads.
Hastings has long been opposed to adding commercials or other promotions to the platform but said during the company's pre recorded earnings conference call that it makes a lot of sense to offer customers a cheaper option.
Hastings said that he was against the complexity of advertising and a big fan of the simplicity of subscription.
Hastings said that the option wouldn't be available for a year or two. On Tuesday, the company reported its first subscriber loss in more than a decade, and the new ad-supported tier has a lot of profit potential.
The recent stall in paid subscriptions was due to growing competition from traditional entertainment companies, as well as rampant password sharing, inflation and the ongoing Russian invasion of Ukraine.
In order to get more people to subscribe to its service, it has increased its content spend. The company hiked prices to pay for it. During the most recent quarter, 600,000 subscribers in the U.S. and Canada were lost due to the price changes.
A lower-tier option that includes advertisements could keep some price-conscious consumers with the service and give them a different avenue to raise funds.
It's pretty clear that it's working for Hulu. Disney is doing something. I don't think we have a lot of doubt that it works, Hastings said.
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