While Netflix is defending hate speech from its paid comedians and targeting millennial snowflakes with its latest round of entertainment, the company is getting closer to bringing ads to the streaming platform. As the company continues to raise prices and lose subscribers, it is also reportedly exploring an ad-supported tier in the coming months.
As Deadline detailed on Thursday, Netflix co-CEO Ted Sarandos confirmed that ads are coming, but the company just isn’t sure how it will roll them out just yet. There’s the option of starting an in-house ad company, of course, or partnering with other firms to make ads a reality between episodes of The Circle.
The streamer said in April that it would offer a cheaper, ad-supported tier to customers after suffering blows to subscriber numbers and its stock. It has reportedly met with Google, NBCUniversal and Roku to discuss potential ad-sales and marketing partnerships.
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The plan, he revealed, is to create “a pretty easy entry to the market, which we’ll build on and iterate to make Netflix a destination for users. What we’ll do first is not representative of what the product will be ultimately. Start light, keep it simple and iterate fast.”
He remained agnostic on whether the streamer would then move to owning its own advertising arm. “If it becomes so important [that] we want to have control over it, we might,” he said.
In theory, this ad-supported tier would not impact anyone with an existing Netflix subscription. But anyone who has used a streaming service in recent years knows how ad creep works, so it’s unlikely many people outside of Netflix are viewing this as particularly good news. There’s some interesting inside baseball to parse in the Deadline piece about how many kinds of “content” Netflix believes it offers (20) and how they believe there’s significant “room to grow” in the streaming space. But the bare-bones assessment here is that Netflix continues to get more expensive, or will require ads to watch it for cheaper, all while the company continues to get smaller.
The news comes on the same day The Hollywood Reporter detailed another round of layoffs at Netflix as the streamer continues to trim back its in-house production staff. The 300 jobs reportedly cut follows a layoff round of about half that in May of this year.
“Both Ted and I regret not seeing our slowing revenue growth earlier so we could have ensured a more gradual readjustment or the business,” read a note sent to staff on Thursday from Netflix co-chiefs Reed Hastings and Ted Sarandos.
About 216 staffers impacted were in the United States and Canadian region, 30 employees were cut in Asia-Pacific countries, 53 in Europe, the Middle East and Africa and 17 in Latin America, the memo stated.
Ads are clearly seen as a viable revenue stream for Netflix these days, but the news will likely do little to keep subscribers happy, many of whom opted for cord-cutting platforms with the express intent of enjoying commercial-free content.
[via Deadline]
