Netflix could introduce ads later this year: report

(NEXSTAR) – Netflix appears to be on track to become the latest streaming service to offer an ad-supported subscription plan, according to a note recently shared with employees.

It isn’t much of a surprise – during last month’s earnings call, Netflix reported its first loss of subscribers in more than a decade, sending the company’s shares into a freefall. In addition to discussing possibly cracking down on password sharing, executives hinted that Netflix may soon offer cheaper, ad-supported plans for subscribers.

Other services like Hulu and Peacock offer similar plans, and Disney+ is on track to debut a similar offering later this year. Apple’s streaming service is ad-free, minus promotions for its own content.

Netflix tested commercials in 2018 – referring to them instead as video promotions that appeared between episodes and movies – but offered users the opportunity to opt out of them.

In a recent note to employees, executives said they aim to introduce a lower-priced, ad-supported plan during the last quarter of 2022, The New York Times reported Tuesday. And for those of you who share – or borrow – someone else’s account, Netflix executives say they’re planning to start cracking down on password sharing around the same time.

Netflix did not immediately respond to Nexstar’s request for comment.

Netflix CEO Reed Hastings has never been a fan of ads, instead viewing them as a distraction from the entertainment the service provides. Hastings has also previously viewed password sharing as “something you have to learn to live with.”

While discussing quarterly earnings, Hastings said password sharing, in addition to streaming competition, is believed to be causing “lower acquisition and lower growth.” In a letter to shareholders last month, Netflix executives reported that more than 100 million households are using a different household’s account.

“This is a big opportunity as these households are already watching Netflix and enjoying our service,” the letter reads. Executives also mentioned how Netflix is testing new features to monetize password sharing.

In March, Netflix said that while features like separate profiles and multiple streams available through its standard and premium plans have been “hugely popular,” they have led to “confusion about when and how Netflix can be shared.”

Two new features have been rolled out for members in Chile, Costa Rica, and Peru that will “enable members who share outside their household to do so easily and securely, while also paying a bit more.”

Earlier this year, Netflix raised monthly subscription prices in the U.S. for all plans in order for the service to “continue to offer a wide variety of quality entertainment options.”

The Associated Press contributed to this report.