February 1, 2023

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Netflix will include ads by the end of 2022, the report says

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Netflix could introduce its lower-priced ad tier by the year’s over, a more sped-up timeline than initially indicated, the company told representatives in a new note.

In the note, executives said they were meaning to present the ad tier in the last three months of the year, and said two people who shared info of the communication on the condition of anonymity to depict internal organization discussions.

The note likewise said Netflix intended to start taking action against password sharing between its subscriber base around the same time, individuals said.

Last month, Netflix stunned the media industry and Madison Avenue when it revealed that it would start offering a lower-priced subscription highlighting ads, after years of publicly expressing that commercials could never be seen on the streaming platform.

Netflix Losing Its Subscribers

Netflix is facing huge business challenges. In announcing its first-quarter profit last month, Netflix said it lost 200,000 subscribers in the initial three months of the year — the first that has occurred in a decade — and expected to lose 2,000,000 more in the months to come.

Since the subscriber announcement, Netflix’s share price has dropped sharply, wiping away generally $70 billion in the company’s market capitalization.

The lagging subscriber growth provoked Netflix to think about offering a lower-priced version of the service with advertising, referring to the outcome of similar offerings from rivals HBO Max and Disney+.

Netflix

Netflix: Ad-Supported Service

Netflix offers a variety of payment tiers for streaming access; its most well-known plan costs $15.49 every month. The new ad-supported tier will cost less. Other streaming services have comparable plans. HBO Max, for example, offers commercial-free assistance for $15 every month and charges $10 per month for the service with advertising.

To be sure, in the note to employees, Netflix executives conjured their rivals, saying HBO and Hulu have had the option to “maintain strong brands while offering an advertisement-supported service.”

“Each significant streaming company excluding Apple has or has declared ad-supported service,” the note said. “For a good reason, individuals need lower-prices choices.”

Higher Prices For Account Sharing

Last month, Netflix likewise reported that it expected to start charging higher prices to subscribers who shared their accounts with a few people.

“So assuming you have a sister, suppose, that is living in an alternate city — you need to share Netflix with her, that is perfect,” Greg Peters, Netflix’s chief operating officer, said on the company earnings call. “We’re making an effort not to close down that sharing, yet we will request that you pay a bit more to have the option to share with her.”

Mr Peters said the company would go “as the year progressed or so of iterating” password sharing before it carried out a plan.

In the note to employees, Netflix executives said the ad-supported tier would be presented “in tandem with our broader plans to charge for sharing.”

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