Netflix Pushes Up Debut of Ad-Supported Tier to Year’s End

Netflix might introduce a lower-priced service with ads by the end of 2022, The New York Times reported Tuesday (May 10).

This would represent a faster timeline for the service than what was originally proposed. Netflix executives, in a note to employees, said the company was trying to introduce the new service in the last three months of 2022, per two anonymous sources speaking with the NYT.

The note also said Netflix’s stated intention is to curb password sharing. Netflix announced the change last month, saying it would offer a lower-priced subscription option. That came after years of saying commercials would never happen on the streaming platform.

However, this comes as Netflix is seeing some headwinds in business. The streaming site said it was down 200,000 subscribers in the first three months of the year, which is a rarity for the company, and said it would likely lose around 2 million more in the next few months.

According to CEO Reed Hastings, Netflix was planning on looking into introducing ads and figuring it out in the next year or so. Netflix seemed to clarify its long-held opposition to ads by saying other services, including Hulu and HBO Max, have debuted ad options.

Netflix said those companies had been able to “maintain strong brands while offering an ad-supported service.”

Netflix has faced some challenges lately, such as shareholders suing the company over allegations that it mislead shareholders over its ability to keep subscribers.

Read more: Netflix Shareholders Sue, Claim Streaming Company Downplayed Slowing Subscriptions

The lawsuit, filed by a Texas investment trust, will look for damages for the fall of Netflix’s share price this year, as it failed to meet subscriber growth estimates. According to the suit, Netflix and its top executives didn’t disclose that subscriber growth was slowing down due to competition.

Netflix shares were down 20% in January after it said subscriber growth had been weak, falling 35% more in April after saying it had shed 200,000 subscribers in Q1 rather than adding its forecast 2.5 million.