Netflix executives have revealed some important yet concerning details regarding its upcoming ad-supported subscription tier during its Q2 earnings interview, The Verge reports. According to company co-CEO Ted Sarandos, some content that is offered by the service may not be available to those subscribed under the new tier.
Sarandos explained that the company must first discuss with studios to receive their approval for including advertisements to their shows or movies that are available on the platform. On that note, The Wall Street Journal reports that Netflix has been actively seeking to negotiate deals with studios, though no details of the discussions are known at this time.
“Today, the vast majority of what people watch on Netflix, we can include in the ad-supported tier,” he said. “There are some things that don’t — that we’re in conversation about with the studios on — but if we launched the product today, the members in the ad tier would have a great experience. We will clear some additional content, but certainly not all of it, but we don’t think it’s a material holdback to the business.”
Chiming in to Sarandos’ statement, Netflix CFO Spencer Neumann says that the service could actually launch the ad-supported tier before having any discussion with the studios. While doing so would spare the company from obtaining any additional content clearance rights, it will also bring serious repercussions – even if it manages to supplement the action.
It is currently unknown which shows or movies that will be excluded when the new subscription tier rolls out, and if this would also affect first-party content such as Stranger Things, The Adam Project, Squid Game, exclusive comedy specials, and so on. One thing’s for certain, removing access to popular content that is unique to Netflix could stop potential subscribers from considering the ad-supported option.
Initially planned to launch later this year, TechCrunch now reports that a Netflix letter to investors suggests that the ad-supported option may debut in the early part of 2023 instead. Further regarding the new subscription tier, Netflix has officially confirmed that it has partnered with Microsoft and officially appointed the tech giant to be its global advertising technology and sales partner.
The decision to introduce a new ad-supported tier is part of the service’s efforts to regain losses caused by password sharing between users as well as strong competition from rivals such as Disney+ and HBO Max. As we’ve reported prior to this, the company is also set to test a new “add a home” feature in certain countries that will charge users an extra US$3 (~RM13) to share accounts with other households.
Meanwhile, Netflix has recently reported a loss of 970,000 subscribers during its Q2 roundup. So far, this figure currently holds the record of being the largest quarterly loss in the service’s history.