Netflix to Add Lower-Priced, Ad-Supported Membership Tier

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Netflix announced it will be introducing commercials to its service, a new ad-supported tier that will give prospective customers (who don’t mind regular breaks) a lower-priced option.

Netflix co-CEO Ted Sarandos confirmed the streaming service will be testing this new subscription tier, a move that comes as the organization suffers months of lost subscribers and dropping share prices. They’ve lost 200,000 subscribers in the first three months of 2022 alone and are expected to lose another two million by the end of June. The company also announced it will be cracking down on password sharing in an effort to stop the bleeding, as it was forced to lay off around 450 staffers as of yesterday (150 of those were in May).

By introducing ads, Netflix is hoping to make up for that lost revenue. They certainly aren’t the first streaming service to do so. Hulu and HBO Max already offer ad-based plans that are cheaper for subscribers, and Disney+ announced in March that it will have an ad-supported subscription tier sometime this year.

The current monthly subscription model in the U.S. states that subscribers can use their account on one, two, or four screens at once and their pricing model is tiered as such, from $9.99 and $19.99.

“We’ve left a big customer segment off the table, which is people who say, ‘Hey, Netflix is too expensive for me and I don’t mind advertising,’” Sarandos said. “We’re adding an ad tier. We’re not adding ads to Netflix as you know it today.”

“Those who have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription. But as much as I’m a fan of that, I’m a bigger fan of consumer choice,” Netflix co-CEO Reed Hastings said during an earnings call. “And allowing consumers who like to have a lower price, and are advertising tolerant, to get what they want makes a lot of sense.”

For those of us who grew up in a time where you became a ninja at using the bathroom, grabbing a snack, and having a 15-second conversation with whoever was in the room during commercial breaks, it’s not the end of the world. It gives more people an option for finally getting in on those binge-worthy shows, and if you simply can’t fathom the idea, you can stay ad-free, just as you are today.

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