While other major streaming services have ad-supported tiers, they have refused to do so. The company is considering adding a lower-cost tier to its offerings.
Reed Hastings, the co- founder and co-CEO of the streaming platform, said during its first-quarter earnings call on Tuesday that it is open to offering a cheaper plan with ads. It marks a major shift in the company's business model after years of resisting calls for a lower-cost tier.
Hastings said that he has been against the complexity of advertising and a big fan of the simplicity of subscription. It makes sense to allow consumers who would like to have a lower price.
Hastings has changed of mind as the company has taken a hit for the first time in a decade. In the first quarter of 2022, the company reported a 200,000-subscriber loss. In a letter to shareholders, the streaming giant stated that it expects to lose 2 million subscribers in the second quarter.
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Password sharing is partially to blame for the subscriber base's decline. The decrease came just a few months after the company raised subscription prices for customers in the United States and Canada.
It is not clear how much the ad-supported tier will cost. The standard tier of the service costs $15.49 per month and the premium tier costs $20 per month. The cost of the new plan is likely to be within that range.
It is just one part of the effort to increase revenue. The service recently announced that it would charge customers a fee for sharing passwords.
Over the next two years, the company expects to finalize its ad-supported streaming package. It will be a good change for customers who want to save a few dollars. Hastings pointed out that it was a consumer choice.
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