Netflix finally considers supporting ads on its streaming services. Recently Netflix has suffered the loss of 200,000 subscribers in the first quarter. At the end of the first quarter, the streaming service provider reported 221Million global subscribers with depreciation of 200,000 and missed it's projected 2.5 Million net add. The speculations say that the dip in subscribers is due to the recent price hike by Netflix in Jan 2022.
On the Earnings call, Netflix Co-Founder, Chairman, President & Co-CEO Reed Hastings said although he is fond of the simpler subscription model that the legacy customers of Netflix are accustomed to, he is considering offering customers cheaper options by allowing ads.
Netflix Co-Founder, Chairman, President & Co-CEO Reed Hastings said, "….And one way to increase the price spread is advertising on low-end plans and to have lower prices with advertising. And those who have followed Netflix know that I've been against the complexity of advertising and a big fan of the simplicity of subscription."
In his words, "….And one way to increase the price spread is advertising on low-end plans and to have lower prices with advertising. And those who have followed Netflix know that I've been against the complexity of advertising and a big fan of the simplicity of subscription."
He further adds, "But as much I'm a fan of that, I'm a bigger fan of consumer choice. And allowing consumers who would like to have a lower price and are advertising-tolerant get what they want makes a lot of sense. So that's something we're looking at now. We're trying to figure out over the next year or 2. But think of us as quite open to offering even lower prices with advertising as a consumer choice."
There was no indication of when or how advertising will be phased in. However, considering recent development, the comments prove their significance. Netflix disclosed not only a subscriber shortfall but also its first global subscriber decrease since 2011. It partly criticized competition, raising concerns about the congested sector more forcefully than before. Netflix currently has 221.6 Million paying customers and still is the leader in its segment; however, the current loss of subscribers points toward its limited options. While discussing the accommodation of ads, Hastings said, "And in terms of the profit potential, definitely, the online ad market has advanced. And now, you don't have to incorporate all the information about people that you used to. So we can be a straight publisher and have other people do all of the fancy ad-matching and integrate all the data about people. So we can stay out of that and really be focused on our members creating that great experience and then again, getting monetized in a first-class way by a range of different companies who offer that service."