It's official - Netflix is bringing in adverts in an effort to attract more customers.
The more affordable ad-supported tier is aimed at users who think the basic plan is too pricey, so would be happy to pay less if it meant watching commercials.
Existing users have nothing to worry about, as there are no changes to any of the current pricing plans, assured the streaming giant’s co-CEO Ted Sarandos at the Cannes Lions advertising festival this week.
“We are 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," he said.
Netflix is currently in talks with ad-sales partners, with a view for the new tier to be launched before the end of the year, according to The Hollywood Reporter.
For UK users, the current Basic Netflix plan is £6.99 (US $9.99) per month which offers 480p streaming, while the Standard plan costs £10.99 (US $15.49) for 1080p resolution.
The streaming giant’s priciest tier is the Premium plan at £15.99 (US $19.99), which offers 4K HDR streaming.
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Unlike rivals Disney Plus or Amazon Prime, Netflix is currently the only streaming service that charges extra for better streaming quality.
It is safe to assume the new ad-supported tier will offer streaming quality similar to the Basic plan.
Netflix has been under increasing pressure to save its flagging business model, shedding some 200,000 subscribers in the first three months of the year.
This was the first time in a decade the giant took a tumble; and a dramatic reversal of their aim of adding 2.5 million.
To negate this, Netflix – who expect to lose a further two million subscribers this second quarter – are not only relying on the cheaper ad-supported subscription plan to boost viewers but are also adopting a more robust stance against password sharing.
In Latin America, the streaming service has been testing an extra payment for those who share their accounts outside their households.
Earlier this year, Netflix estimated around 222 million paying households were sharing, but says it has plans to bring in ‘more effective monetisation of multi-household sharing’ in the future.
Sarandos told the festival he believed these above planned changes would see the company bounce back to growth.
"We have plenty of scale and profitability and free cash flow to continue to grow this business," he said.
