Ted Sarandos attends the 94th Academy Awards at the Dolby Theater in Hollywood, California on March 27, 2022.
Angela Weiss | AFP | Getty Images
netflix is likely to offer multiple subscription plans with ads in the future, the company’s co-CEO Ted Sarandos said on Tuesday, just weeks after the streaming giant rolled out its first option funded by the advertising.
For viewers who don’t want to see ads, Netflix already offers several plans ranging from $9.99 per month to $19.99 per month. And the company will likely do the same for its ad-supported model as the business grows, Sarandos said at the UBS TMT conference.
“We have multiple tiers today, so it’s likely we’ll have multiple tiers of announcements over time, but nothing to talk about right now,” Sarandos said. “And the product itself will evolve, I guess, quite dramatically, but slowly, incrementally.”
After resisting advertising on its platform for years, Netflix last month released a cheaper $6.99 option with ads in partnership with Microsoft. The move comes as Netflix faces pressure to find new ways to boost revenue as subscriber growth slows and competition intensifies.
In another effort to boost revenue, Sarandos also said on Tuesday that the company will focus on password sharing in 2023. Netflix said more than 100 million households, including 30 million in the United States, use a shared password.
Sarandos likened the upcoming crackdown on password sharing to raising prices, which he says doesn’t make consumers happy. That’s why he said the company is focusing on how to fix the problem so customers “see the value of Netflix.”
“There are people enjoying Netflix, literally for free today,” Sarandos said. “So they get a lot of value out of it. I think they’ll be happy to have their own account.”
Netflix has priced its “basic with ads” option just below the prices of its competitors. Level subscribers see an average of four to five minutes of ads per hour and cannot download movies or TV series.
A limited number of TV series and movies are not initially available on the ad-supported tier due to licensing restrictions, but Sarandos said on Tuesday around 90% were included and negotiations would begin soon to include the rest. .
Netflix founder and co-CEO Reed Hastings admitted last week at the New York Times Dealbook conference that he initially didn’t believe in the ad-supported model for Netflix and was slow to get on board. put there.
“I was wrong about that. Hulu has proven that you can do it at scale and give customers lower prices. We’ve enabled that,” Hastings said. “I wish we had flipped a few years earlier on this, but we’ll make up for it.”
In addition to Hulu, streaming competitors like Warner Bros.’ HBO Max. Discovery, NBCUniversal’s Peacock, and Paramount Global’s Paramount+ offer cheaper, ad-supported subscription options. Disney+ also plans to launch a tier with ads, while raising prices for its ad-free option and other streaming services.
Disclosure: Comcast’s NBCUniversal is CNBC’s parent company.
