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Netflix Inc co-founder Reed Hastings said on Wednesday he was “wrong” to resist ads for his streaming service.
Hastings said Hulu proved streaming services could support advertising, and offer consumers lower prices.
“I wish we had flipped a few years earlier on it,” Hastings said during the New York Times DealBook summit.
Netflix is one of the few platforms that has stayed away from the advertising model for its video streaming. Ads have become a vital source of earnings for platforms, and this admission from Hastings confirms the trend. Netflix is relying on Microsoft to power its advertising venture.
And given its vast user base of around 222 million, Netflix has enough data to sell advertisements easily. Partnering with Microsoft helps the company develop ad tools and sales. While advertisers will love an opportunity to advertise on Netflix, the new plan will also bring a new subscription, which could be more popular in countries like India where people don’t necessarily pay for premium subscriptions.
Netflix is also discouraging password sharing. The company had announced this year that it will levy a nominal fee for those who are sharing their passwords with their acquaintances. In March, Netflix launched a pilot in three countries (Peru, Costa Rica, and Chile).
Netflix has launched a new plan called “Basic with Ads” in 12 countries– Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, the UK and the US. This is the most affordable Netflix monthly plan that comes with certain compromises plus ads.
Netflix said that at launch ads will be 15 or 30 seconds in length, which will play before and during shows and films. The new Netflix Basic with Ads plan costs $6.99 per month. The difference is that to save $3 monthly, users will have to watch ads and not just that they will lose access to unlimited movies and TV shows.
Netflix has said that with the ‘Basic with Ads’ plans, “some movies and TV shows will be unavailable.” The resolution of the content will be up to 720p HD. Thankfully, users will have access to Netflix games without any ads. The platform hasn’t said if the ad-tier will be launching in markets like India, where it already caters to the viewers with a special mobile-only plan that starts from Rs 149 per month.
(With inputs from Reuters)
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