After years of resisting the option, the company is open to introducing cheaper, ad-supported tiers.
Reed Hastings said in an earnings interview Tuesday that he has been against the complexity of advertising and a big fan of the simplicity of subscription.
He said that he was a bigger fan of consumer choice and that allowing consumers who would like to have a lower price and are advertising- tolerant makes a lot of sense. Think of us as willing to offer even lower prices with advertising as a consumer choice.
Hastings did not say how much a cheaper tier would cost.
Hastings told Variety in September 2020 that going ad-free was the best capitalism for the company.
The streaming service lost 200,000 subscribers in the first quarter, its first decline since 2011. On Tuesday, shares plunged 25%. The share price of the company is lower than this time last year.
A cheaper tier would give the books some support.
The company expects to lose another 2 million subscribers in the second quarter and says revenue is not growing as fast as it would like.
It is pretty clear that it is working for Hulu. Disney is doing something. Hastings said that it worked, and that there was a lot of doubt about it.
Ahead of Hastings comments, industry experts cast doubt on the viability of an ad-supported streaming service. In a January 21 investor note, analysts from Needham estimated that the company could make $9 billion a year by adding ads.
In January, the company raised prices. The Basic plan costs $9.99, the Standard plan costs $15.49 and the Premium plan costs $19.99.
Insider dives into the economics of an ad-supported service.
All Rights Reserved © 2024
