Netflix Creating Less Expensive Tier Supported by Ads

Netflix has been making headlines all day since it was announced that they lost 200,000 subscribers in Q4 compared to last years gain. The company penned a letter to shareholders revealing exactly what they believed the problem could be. In the letter, Netflix executives revealed that they believed password sharing was one of the major catalysts in their decline in subscriptions. Now, it seems that the Streaming Service also wants to explore the idea of a new, less expensive plan that will feature ads. During the company’s quarterly earnings call, Netflix CEO Reed Hastings, revealed the idea.

“Those who have followed Netflix know that I have been against the complexity of advertising, and a big fan of the simplicity of subscription,” Hastings revealed. “But as much as I am a fan of that, I am 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. It is pretty clear that it is working for Hulu. Disney is doing it, HBO did it. We don’t have any doubt that it works,”

It seems as if the streaming service is having to make some tough calls to keep its business afloat. It seems as if they knew this was coming with them announcing a big change to the service last year. Back in March, in a move that would surely prompt even more of a decline in subscribers, Netflix announced plans to test technology that would identify accounts being shared, and subsequently charge accounts more, between $3 to $4 extra per month. 

“We’ve always made it easy for people who live together to share their Netflix account, with features like separate profiles and multiple streams in our Standard and Premium plans,” Chengyi Long, director of product innovation at Netflix, wrote in a blog post about the experiment. “While these have been hugely popular, they have also created some confusion about when and how Netflix can be shared. As a result, accounts are being shared between households — impacting our ability to invest in great new TV and films for our members.”

What do you think of these big changes over at Netflix? Do you think things will turn out for the better? Let us know your thoughts in the comments section below or by hitting our writer @NateBrail up on Twitter!