A more affordable, ad-supported Netflix plan could be introduced before the end of 2022, Netflix told employees in an internal letter (via The New York Times).
Netflix is currently planning to introduce the new ad-supported tier in the final three months of the year, with the plan aimed at attracting new subscribers who find the current pricing unaffordable.
The company has been steadily raising its prices for the last few years, and enacted a significant increase at the beginning of 2022. The basic streaming plan is now priced at $9.99, up from $8.99, and the standard plan that allows for HD streaming is priced at $15.49, up from $13.99 per month.
The highest-tier 4K Ultra HD streaming plan now costs $19.99, a $2 increase over the prior $17.99 price point. Netflix continues to be the only streaming service that prices by streaming quality, with other options like Disney+, Hulu, and Apple TV+ offering more straightforward pricing.
Netflix has long resisted implementing an ad-supported tier and has said multiple times in the past that the streaming service would never show ads, but it is hemorrhaging subscribers. Netflix in April said that it lost subscribers in the first quarter of the year, and it marked the first subscriber loss for Netflix in more than a decade. Netflix lost 200,000 subscribers, and expects to lose two million more next quarter.
The subscriber loss has been partially attributed to account sharing, which Netflix has said that it is going to crack down on. Netflix told employees in the letter that it plans to cut down on password sharing by restricting access to subscribers who share a household. Netflix estimates that 222 million paying households are sharing with an additional 100 million households that are not being monetized.
Netflix started testing an extra payment for those who share their Netflix accounts with people outside their households in March. In Netflix’s current test markets of Chile, Costa Rica, and Peru, customers can pay an extra fee to share their accounts with two people outside of their household. When the test was launched, Netflix said that it was working to “understand the utility of these two features” before making changes in other countries.