Ads are coming to Netflix. Not long after The New York Times reported that subscribers would have the option to subscribe to an ad-supported tier, Netflix Co-CEO Ted Sarandos confirmed the news during an interview at Cannes Lions.
“We’ve left a big customer segment off the table, which is people who say: ‘Hey, Netflix is too expensive for me and I don’t mind advertising,’” Sarandos told The Hollywood Reporter.
“We adding an ad tier; 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.’”
Netflix’s plan to embrace the advertisement industry comes after the streaming platform reportedly lost 200,000 subscribers last quarter. The loss in subscribers has led many to believe that Netflix could be the target of a takeover in the future.
“[A takeover] is always a reality, so we have to be wide-eyed about that,” Sarandos said.
“We have plenty of scale and profitability and free cash flow to continue to grow this business.”
Despite recent setbacks, Sarandos is confident that the company will rebounds and build toward a better future. As the Co-CEO puts it, there is still “a lot of room to grow” despite recent stock shakeups.
“We’ve gotten through experiences where the market disconnects from [our] core business and you have to prove the thesis still works, and is going to work long-term,” he noted.
“There’s a lot of uncertainty in the world today, and if they get anything that rocks the foundation of the narrative, they get nervous.”