Adverts are officially coming to Netflix — and subscriptions will get cheaper

The streaming platform says viewers can opt for low-cost packages if they are willing to watch sponsored content

Netflix lost 200,000 subscribers for the first time earlier this year. Reuters
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Netflix is in talks with several companies for advertising partnerships as the streaming platform looks to plug slowing subscriber growth by rolling out cheaper plans.

The company is in discussions with Google and NBCUniversal, among others, for potential marketing tie-ups.

"We're talking to all of them right now," Ted Sarandos, the co-chief executive of Netflix, said when asked which company the streaming platform was looking to partner with on Thursday.

After losing subscribers for the first time in a decade and projecting a two million decline in the coming quarter, Netflix said in April it was seriously looking at advertising.

"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'," Sarandos said at Cannes Lions, a business festival that brings companies from across the communications, marketing and advertisement industries together in the French city.

Disney+, Netflix's most formidable challenger, has also said it would introduce an ad-supported tier, as the pandemic boom in streaming fades, competition tightens and rising inflation pinches consumer spending on entertainment.

Streaming platforms Hulu and HBO Max already offer ad-based plans that are cheaper than their commercial-free services.

In April, Netflix also hinted a global crackdown on password-sharing was on its way.

In a letter to shareholders, the company estimated that more than 30 million US and Canadian households are using a shared password. It estimated more than 100 million additional households around the world are likely using a shared password as well.

“This is a big opportunity as these households are already watching Netflix and enjoying our service,” a company representative said.

“Sharing likely helped fuel our growth by getting more people using and enjoying Netflix. And, we’ve always tried to make sharing within a member’s household easy, with features like profiles and multiple streams.

"While these have been very popular, they’ve created confusion about when and how Netflix can be shared with other households.”

On Thursday, Netflix said it laid off 300 employees, in the second round of job cuts aimed at lowering costs after the streaming giant lost subscribers for the first time in more than a decade.

The move mostly affected its US workforce and came after the company cut 150 jobs last month.

"While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth," a Netflix representative said.

— Additional reporting by Reuters

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