Netflix could roll out an ad-supported tier by the end of the year, according to a report by The New York Times, which cited a company note sent to employees. Netflix also indicated it was planning to introduce charges for password sharing, something the company is currently testing in a few countries, around the same time, according to the report.
The ad-supported tier is still in its early days, a person familiar with the matter said.
In public perception, the news will likely further cement Netflix’s commitment to both moves. Last month, when Netflix reported its first subscriber loss in a decade, co-CEO Reed Hastings reversed years of dismissing any interest in advertising by revealing the company was looking at a cheaper, ad-supported tier for Netflix.
Currently, Netflix is testing password-sharing fees in Chile, Costa Rica and Peru. These additional charges let people with a standard or premium Netflix plan pay extra to share the account with up to two people who don’t live in the same home. The test includes the ability to transfer an existing profile — including its viewing history and personalized recommendations — to an “extra member.”
Adding advertising for a new Netflix tier is more complicated. Netflix, which doesn’t have an ad-sales force, would need to hire people and create its own, acquire a company to absorb an ad-sales team, or forge a partnership with an existing entity.
The drop in viewers has buffeted Hollywood’s confidence in streaming as the engine for future growth. Netflix’s years of unflagging growth pushed nearly all of Hollywood’s major media companies to pour billions of dollars into their own streaming operations. These so-called streaming wars brought about a wave of new services, including Apple TV Plus, Disney Plus, HBO Max, Peacock and Paramount Plus, among others, a trend that’s complicated how many services you must use — and pay for — to watch your favorite shows and movies online.