Netflix has announced the move after it lost 200,000 subscribers during its most recent quarter.
Netflix is set to introduce an advertising-supported subscription offering.
During the company’s quarterly earnings call in the US, the CEO of Netflix said the company is open to an advertising-supported subscription model in the near future after years of rejecting calls for an ad-supported streaming tier.
Netflix co-CEO Reed Hastings stated: “One way to increase the price spread is advertising on lower-priced plans. Those who have been following Netflix know that I have been against the complexity of advertising and a fan of the simplicity of subscription. But I’m 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.”
Hastings added: “The online ad market has advanced and you don’t have to incorporate all the information about people that you used to. We can be a great publisher and have other people do all of the fancy ad-matching and integrate all the data so we can stay out of that and be focused on our members and create a good experience.”
With its advertising play, Netflix can avoid wading into data-privacy pitfalls that have become problematic for some internet companies by using third-party technologies that match ads with viewers without needing access to personally identifiable information, Hastings said.
In an effort to lure more subscribers, Netflix has increased its content spend, particularly on originals. To pay for it, the company hiked the prices of its service. Netflix said those price changes are helping to bolster revenue but were partially responsible for a loss of 600,000 subscribers in the U.S. and Canada during the most recent quarter.