Ads are coming to Netflix sooner than the company previously said.
A recent report from the New York Times mentioned that Netflix's executives have allegedly told employees that the company will roll out ad-supported tiers later in 2022.
Netflix co-founder and co-CEO Reed Hastings previously told investors the company would figure out if it should release ad-supported tiers in the "next year or two," per Digital Trends.
Netflix Ad-Supported Tiers Arrival
According to The New York Times' article, Netflix executives told employees that the company is planning to include ad-supported subscription tiers in the last three months of 2022.
This announcement contradicts what Hastings initially told investors during its latest earnings call on April 19 when he announced that the possibility would be explored (and possibly implemented) within 2023 or 2024.
Meanwhile, other company executives did consider the possibility of including ad-supported tiers on Netflix's streaming platform, but there was no hint that they were coming so soon.
Hastings was strongly against the idea of bringing ads and involving advertisers since Netflix launched as a subscription service.
However, he now changed his perspective in favor of consumer choice, saying that a move where ad-tolerant consumers would be able to enjoy Netflix at a lower price makes "a lot of sense."
"One way to increase the price spread is advertising on low-end plans," Hastings said in Netflix's latest quarterly investors' interview. "Think of us as quite open to offering even lower prices with advertising as a consumer choice."
Hastings' move of opening Netflix up to advertisers is motivated by the success of the company's competitors, such as HBO Max, Amazon Prime Video, and Hulu.
Disney Plus is one of the latecomers to the ad-supported subscription tier craze, with the platform releasing ad-supported tiers sometime in late 2022, like Netflix, according to a report from The Verge.
Investors' and Users' Disapproval
The addition of ad-supported subscription tiers could make sense for the company to grow its subscriber base after losing 200,000 subscribers in the first quarter of 2022. However, the company's investors aren't as optimistic as Hastings is.
CNN's report on the matter mentioned that Netflix's decision to add ad-supported subscription tiers spooked investors, which resulted in the company's stock dropping by 1% following the announcement.
Current subscribers are also not happy with Netflix's decision, with many saying that the company should stay as it is.
In fact, CNBC previously reported that a survey from Hub Entertainment Research showed that 23% of Netflix subscribers, or 14 million subscribers, would leave Netflix if the company introduced ads. However, this will only happen if Netflix includes ads without dropping prices.
The study also found that respondents were more forgiving of the ads if Netflix dropped prices, with only 14% opting to leave Netflix.
Despite the lowered prices for ad-supported subscription tiers, many are still unconvinced that paying money for a subscription with ads is a good idea, as shown in the comments section of IGN's tweet regarding Netflix's ad-supported tier subscription inclusion.
