Netflix Likely Getting More Ad-Based Tiers As Co-CEO Teases 'Pretty Dramatic' Changes

As Netflix continues to look for ways to bolster its bottom line, co-Chief Executive Ted Sarandos says the company is looking to  multiple ad-supported tiers to its subscription service. This follows the recent rollout of the company's first ad-supported option.

Netflix admitted back in July of this year that the company was projected to lose 2 million members in Q2, after a loss of 200,000 subscribers in Q1. Since that time the streaming platform has announced a few options that it would be testing in an attempt to stop the bleeding. Those included testing a new password-sharing fee and a less expensive ad-supported tier. With the new ad-supported tier having been rolled out, Exec Ted Sarandos has now stated that the company will be looking to add more of the lower-priced ad-supported options in the future.

"We have multiple tiers today, so it's likely we'll have multiple ad tiers over time, but nothing to talk about yet," remarked Sarandos in an interview with CNBC. "And the product itself will evolve, I suspect, pretty dramatically, but slowly, gradually."

The new ad-supported tier costs viewers $6.99 a month, with the first tier with no ads starting at $9.99 a month, and the top tier which is $19.99. The main differences between the two lower tiers are that you will get ads with the $6.99 option and only be able to stream in 720p resolution. The company also stated that there would be a "limited number of movies and TV shows that won't be available due to licensing restrictions," which Netflix says it is working to resolve.

Sarandos also mentioned focusing on addressing password sharing in 2023. The company has shared that more than 100 million households, including 30 million in the U.S., are sharing passwords with others outside the paying residence. Sarandos says that Netflix is trying to find a way to address the issue in which customers will "see the value in Netflix."

"There are folks who are enjoying Netflix, literally for free today," Sarandos remarked. "So, they're getting a lot of value out of it. I think they'll be happy to have their own account."

Co-CEO Reed Hastings has been slow to come around to the ad-supported model. He remarked, "I was wrong about that. Hulu proved you could do that at scale and offer customers lower prices. We did switch on that. I wish we had flipped a few years earlier on that, but we'll catch up."