Netflix to launch ad-supported tier by end of year

Netflix’s lower-priced ad-supported tier could be available by the end of the year, probably after October, which is ahead of schedule than previously stated. According to a The New York Times’ report, the decision to launch an ad-supported version was conveyed to the employees by the streamer.

Netflix had disclosed sluggish revenue growth and its first subscriber decline in over a decade less than a month ago, and the ad tier is parts of its efforts to reverse those trends.

It has been a while since this will-Netflix-have-ads-in-future debate has started doing the rounds.

Netflix and ads might look like an oxymoron, as the ad-free experience has been at the core of its DNA – the distinctive factor that distinguishes it from the rest.

CEO Reed Hastings has always protected Netflix’s premium position. “We don’t offer pay-per-view or free ad-supported content. Those are fine business models that other firms do well. We are about flat-fee unlimited viewing commercial-free,” says one of its investor pages.
After October, Netflix's attempt into ad-supported subscription streaming video could become a reality. The streaming behemoth stated last month that it was exploring the move after losing 200,000 net customers globally and forecasting another 2 million in the current quarter, which ends June 30.

According to two people, who supplied parts of the message as part of internal business deliberations, Netflix executives stated in the note that they planned to launch the ad tier in the final three months of the year. According to the people, the note also stated that they planned to cut down on password sharing among their subscriber base around the same time.

Netflix stunned the media industry and Madison Avenue when it revealed that it would begin offering a lower-priced subscription featuring ads, after years of publicly stating that commercials would never be seen on the streaming platform.

But Netflix is facing significant business challenges. In announcing first quarter earnings last month, Netflix said that it lost 200,000 subscribers in the first three months of the year — the first time that has happened in a decade — and expected to lose two million more in the months to come. Since the subscriber announcement, Netflix’s share price has dropped sharply, wiping away roughly $70 billion in the company’s market capitalization.