Netflix may launch its lower-priced ad-supported tier by the end of the year, a faster timeline than previously stated, according to a recent note to employees.
Netflix co-CEO Reed Hastings told investors that the company would investigate the possibility of launching an advertising-supported platform and would try to "figure it out over the next year or two."
The company is having difficulties as streaming competition heats up: Netflix's stock dropped last month after the company reported its first quarterly subscriber loss in more than ten years.
According to two people who shared information about the communication on the status of anonymity to describe internal company discussions, Netflix executives stated in the note that they hoped to launch the ad tier in the final three months of the year. According to the note, Netflix planned to begin cracking down on password sharing among its subscriber base around the same time.
After years of publicly stating that commercials would never be seen on the streaming platform, Netflix stunned the media industry and Madison Avenue last month when it announced that it would begin offering a lower-priced subscription with ads.
However, Netflix faces significant business challenges. Netflix announced first-quarter earnings last month, saying it lost 200,000 subscribers in the first three months of the year, the first time in a decade, and expected to lose two million more in the months ahead. Netflix's share price has plummeted since the subscriber announcement, wiping out roughly $70 billion from the company's market capitalization.
The latest note to staff indicated that the timeline had accelerated. "Yes, it's fast and ambitious, and it will necessitate some sacrifices," the note stated.
A Netflix representative declined to comment.
Netflix has several pricing tiers for streaming access, with the most popular plan costing $15.49 per month. The new ad-supported tier will be less expensive. Similar plans exist for other streaming services. HBO Max, for example, charges $15 per month for a commercial-free service and $10 per month for a service with advertising.
Netflix executives stated in a note to employees that the advertising-supported tier would be introduced "in tandem with our broader plans to charge for sharing."
Indeed, in the employee memo, Netflix executives cited their competitors, claiming that HBO and Hulu have been able to "maintain strong brands while offering an ad-supported service."
Netflix also announced last month that it would start charging higher prices to subscribers who shared their accounts with multiple people.
