Netflix Inc (NASDAQ:NFLX) plans to offer multiple ad-supported tiers in the future and crack down on password sharing, co-CEO Ted Sarandos said at a UBS conference Monday.
The streaming giant currently offers multiple tiers, ranging in price from $6.99 to $19.99, but there will likely be a wider variety of ad-supported tiers going forward, according to Sarandos.
“We have multiple tiers today, so it’s likely we’ll have multiple ad tiers over time, but nothing to talk about yet,” Sarandos said. “And the product itself will evolve, I suspect, pretty dramatically, but slowly, gradually.”
The shift toward ad-supported programming comes as Netflix looks to boost revenue and offset slowing subscriber growth. Netflix’s $6.99 basic tier shows viewers an average of four to five commercials an hour, according to reports.
Another potential revenue generator is the company’s crackdown on password sharing. More than 100 million households, including 20 million in the US, are using a shared password, Netflix has said.
“There are folks who are enjoying Netflix, literally for free today,” Sarandos said. “So, they’re getting a lot of value out of it. I think they’ll be happy to have their own account.”
Sarandos’ counterpart, co-CEO Reed Hastings, said last week that the company was slow to adopt the ad-supported model.
“I was wrong about that. Hulu proved you could do that at scale and offer customers lower prices. We did switch on that,” Hastings said at the The New York Times’ Dealbook conference. “I wish we had flipped a few years earlier on that, but we’ll catch up.”
Shares of Netflix closed 2.5% lower Monday at $453.90.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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