As it tries to find ways to address its declining subscriber base, reports of Netflix planning to add an ad tier has been confirmed by Co-CEO Ted Sarandos at this year’s Cannes Lions advertising festival.
In a report by the Hollywood Reporter, Sarandos explained that they have to address a segment of people who want lower Netflix prices–and don’t mind the advertising that comes along with it. “We adding an ad tier; we’re not adding ads to Netflix as you know it today. We’re adding an ad tier for folks who say, ‘Hey, I want a lower price and I’ll watch ads’,” Sarandos said.
To develop its ad tier, Wall Street Journal reports that Netflix is in talks with Google and NBCUniversal with it. There are no details yet on the arrangement–ie. how many ads will users see per hour, or if there will be ad targeting.
On top of adding features like games, Netflix is finding all possible solutions to address its growth problems. Aside from a shrinking subscriber base, Netflix’s company share price has tanked for the past few months, and we have yet to see the streaming company recover from the loss.
Despite its uncertain future, Sarandos dismisses the stock drop, stating that there is still a lot of room to grow for Netflix.
“We’ve gotten through experiences where the market disconnects from [our] core business and you have to prove the thesis still works, and is going to work long-term. There’s a lot of uncertainty in the world today, and if they get anything that rocks the foundation of the narrative, they get nervous.”