Netflix Poised to Launch Cheaper, Ad-Supported Plan by End of This Year

“Yes, it’s fast and ambitious and it will require some trade-offs,” streamer tells employees in note obtained by the New York Times

reed hastings netflix
Netflix's Reed Hastings (Getty Images)

Netflix could be launching its cheaper ad-supported tier as soon as the end of 2022, according to a note to employees obtained by the New York Times.

That’s also when Netflix plans to begin cracking down on password sharing, the newspaper reported Tuesday. Both the crackdown on password sharing as well as the ad-supported tier were ideas that the streamer had already floated in response to the Q1 loss of 200,000 subscribers that the company reported last month. However, neither was not expected so quickly.

“Yes, it’s fast and ambitious and it will require some trade-offs,” the executives wrote in the note, according to the Times. “Every major streaming company excluding Apple has or has announced an ad-supported service. For good reason, people want lower-priced options.”

Reps for Netflix had no comment when reached by TheWrap.

Last month, Netflix CEO Reed Hastings said during the company’s earnings call that the streamer was exploring the idea of introducing an ad-supported option at a lower cost to subscribers, but added that the model would likely come to fruition “over the next year or two.”

The company had a weak start to the 2022 fiscal year, reporting a loss of 200,000 subscribers in Q1, dipping to 221.64 million from 221.8 in Q4 of 2021 — even though Netflix forecast it would add 2.5 million signups.

Since the dismal Q1 earnings report, Netflix has seen a collapse in its stock price and a loss of $70 billion in market capitalization.

The company’s projections for current quarter could be even worse, potentially falling another 2 million. But, during the earnings call, Netflix also chalked some of that loss up to ongoing password sharing among subscribers, estimating that 100 million households worldwide, including 30 million in the U.S. and Canada, may be watching Netflix and engaged with it via password sharing. The streamer hinted that methods of cracking down and asking users to pay more to share with those outside your household may be on the way soon.