Netflix is planning to introduce ads, its chief executive has announced. This news follows the first time where earnings showed that the streaming giant is losing subscribers rapidly for the first time since 2011.
In response, Netflix has announced a range of possible changes, including a much bigger crackdown on people sharing accounts and now this news in advertising. Netflix CEO Reed Hastings explained how this choice will allow for a “lower price”, though the company has also hiked the price of its subscription a number of times recently.
Netflix has never included ads in its app with users presuming that the paid subscription per month would minimise the amount of interruptions experienced while watching a film. On the other hand users are so accustomed to receiving ads but mostly on free platforms such as TikTok, YouTube and other social media. Only time will tell how users respond.
Hastings has spoken about the difficult decision. “Those who have followed Netflix know that I have been against the complexity of advertising, and a big fan of the simplicity of subscription,” Mr Hastings said during the call. “But as much as I am a fan of that, I am 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.”
“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,” Mr Hastings said in the call. “We can stay out of that, and really be focused on our members, creating that great experience.”