Netflix's lower-cost ad-supported plan could launch by the end of the year, according to a memo sent to workers.
According to two people who supplied parts of the letter on the condition of anonymity to describe internal business deliberations, Netflix executives said they hoped to debut the ad tier in the final three months of the year. According to the persons, the note also stated that Netflix would start cracking down on password sharing among its subscribers around the same time.After years of publicly saying that advertising would never be seen on the streaming platform, Netflix startled the media world and Madison Avenue last month when it announced that it will begin providing a lower-priced subscription with adverts.
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Netflix, on the other hand, is having serious financial difficulties. Netflix reported last month that it lost 200,000 customers in the first three months of the year, the first time in a decade, and that it expects to lose another two million in the months ahead. Netflix's share price has plummeted since the subscriber announcement, wiping off about $70 billion from the company's market capitalization.
Netflix co-chief executive Reed Hastings told investors that the business will look into the idea of launching an ad-supported platform and would try to "figure it out over the next year or two."
The most recent communication to staff indicated that the schedule had accelerated.
"Yes, it's quick and ambitious, and it will necessitate some compromises," the note stated.
Netflix declined to respond.
Netflix has a number of subscription plans, the most popular of which costs $15.49 a month. The new ad-supported tier is less expensive. Other streaming services are following suit. HBO Max, for example, costs $15 per month for a commercial-free service and $10 per month for a service with advertising.
Netflix officials did mention their competition in the email to employees, claiming that HBO and Hulu have been able to "keep great brands while offering an ad-supported service."
"Every major streaming firm, save Apple," the memo stated, "has or has announced an ad-supported service." "People seek low-cost solutions for good reason."
According to a person familiar with the conversations, Netflix has expressed interest in expanding its advertising infrastructure externally, including with a business called The Trade Desk, which helps marketers run ads on multiple internet-enabled platforms. The Trade Desk has David Wells, Netflix's former chief financial officer, on its board of directors, and has been in contact with the company for years, according to one source, but talks have lately heated up when Netflix announced it will develop an advertising tier.
Netflix also stated last month that it will start charging higher charges to members who shared their account with several persons.
"So if you have a sister who lives in a different place and you want to share Netflix with her, that's fine," Netflix's chief operating officer, Greg Peters, said on the company's earnings call. "We're not trying to stop you from sharing, but we'll ask you to pay a little extra to share with her."
Mr. Peters stated that the corporation will "iterate for a year or two" on password sharing before implementing a strategy.
Netflix officials wrote to employees that the ad-supported tier would be implemented "in combination with our broader intentions to charge for sharing."
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