In this photo illustration, the Netflix logo in the App Store is visible on the screen of a smartphone.
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After years of resistance to ads in its streaming service, Netflix is now “open” to offering lower prices with ads, co-CEO Reid Hastings said on Tuesday.
Hastings has long opposed adding ads or other promotions to the platform, but said during the company’s pre-recorded earnings conference that “it makes a lot of sense” to offer customers a cheaper option.
“Those who have followed Netflix know that I was against the complexity of advertising and I am a big fan of the simplicity of the subscription,” said Hastings. “But as much as I’m a fan of it, I’m a big fan of consumer choice and allowing consumers who would like to have a lower price and are tolerant of advertising to get what they want makes a lot of sense. “
The option is unlikely to be available in the service for a year or two, Hastings said. A new level supported by ads has great potential for profit for Netflix, which on Tuesday reported its first loss of subscribers in more than a decade.
Netflix cites growing competition from recent streaming launches by traditional entertainment companies, as well as widespread password-sharing, inflation and the ongoing Russian invasion of Ukraine for the recent suspension of paid subscriptions.
In an effort to attract more subscribers, Netflix has increased its spending on content, especially originals. To pay for it, the company raised the prices of its services. Netflix said these price changes helped increase revenue, but were partly responsible for the loss of 600,000 subscribers in the United States and Canada in the last quarter.
A lower-level option that includes ads may keep some cost-conscious users of the service and provide Netflix with a different way to raise funds.
“It’s pretty clear he works for Hulu. Disney does. HBO did it, “Hastings said. “I don’t think we have much doubt that it works.”