Netflix’s business model could soon be due for a fundamental shakeup. After years of denying interest in an ad-supported model for its subscriptions, Netflix CEO Reed Hastings now says that the streaming giant is “quite open” to a plan like the one used by Hulu.
“Those who have followed Netflix have known that I’m against the complexity of advertising and I’m a big fan of the simplicity of subscriptions,” Hastings said in Netflix’s Q1 2022 earnings interview. “But as much as I’m a fan of that, I’m 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.”
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He continued, “So that’s something we’re looking at now, we’re trying to figure it out over the next year or two, but think of us as quite open to offering even lower prices with advertising as a consumer choice.”
Hastings’ comments follow an earnings update in which Netflix reported losing 200,000 subscribers. In response, it is now exploring a crackdown in account sharing in addition to the new ad-supported model.
“It’s not a short-term fix because once you start offering a lower price plan with ads as an option, some consumers take it, and we’ve got a big install base that probably are quite happy where they are. as, it would phase in over a couple of years in terms of being material volume,” Hastings said.
“And 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. You can be this great publisher and have other people do all the fancy ad matching and integrating all the data about people so we can stay out of that.”
Hastings said he expects Netflix to pursue a tiered model similar to Hulu, which gives users access to content at roughly half the cost of the version without ads.
“It’s pretty clear that it’s working for Hulu. Disney’s doing it. HBO did it. I don’t think we have a lot of doubt that it works. All those companies have figured it out, I’m sure we’ll just get in and figure it out as opposed to test it and maybe do it or not do it,” he said.
While it explores these options, Netflix is preparing for the release of Stranger Things Season 4. It’s also pushing into new areas like gaming. For more info, here’s a look at the best streaming services right now.
Kat Bailey is a Senior News Editor at IGN as well as co-host of Nintendo Voice Chat. Have a tip? Send her a DM at @the_katbot.