Netflix confirms ad-supported plan will have fewer films and TV shows at launch

Netflix previously announced it is launching an ad-supported tier after losing subscribers for the first time in almost a decade. But the streaming giant has now confirmed that the new membership plan will have some caveats at launch.

The company confirmed during its Q2 2022 earnings call on Tuesday that its upcoming ad-supported tier will not feature all titles available in other membership plans. “Today, the vast majority of what people watch on Netflix, we can include in the ad-supported tier today,” Netflix co-CEO and chief content officer Ted Sarandos said (transcription via Motley Fool).

The confirmation comes after WSJ reported earlier this month that the streaming giant is trying to renegotiate programming deals with several production companies. Netflix reportedly hopes these talks would eventually allow them to put ads next to some big titles on the platform.

Netflix did not discuss the reported renegotiations in the earnings call, but Sarandos said they are working they “will clear some additional content" to the ad-supported plan. But the exec noted that not all TV shows and movies in the ad-free subscriptions will be included.

The same report mentioned that Netflix has reached out to Warner Bros., Universal, and Sony to discuss its ads-related plans. These production companies own licenses or produce some popular Netflix Originals, including “You,” “Russian Doll,” and “The Crown,” respectively.

The streaming giant did not say when the ad-supported tier will launch. But Netflix COO Greg Peters said it will be gradually available in various regions. “We're launching first in the countries that have sort of the more mature ad markets and we feel more confident in the ad monetization, then we'll sort of explore next tiers of countries over time,” Peters said.

Netflix execs previously made statements, suggesting they were not too interested in putting ads on the streaming platform. But that notably changed earlier this year, when the company confirmed it lost 200,000 subscribers in the first quarter of 2022. In this week’s letter to shareholders, Netflix revealed it lost another 970,000 subscribers in the last quarter. The company, however, expects to gain 1 million subscriptions in the current quarter.

Aside from working on gaining new subscribers, Netflix has also been trying to curb account sharing. The company recently started testing an “Add a Home” feature in select Latin American markets. Like the earlier announced "Add an Extra Member" option, the new feature requires subscribers to pay an additional fee when their account is used in a different household.

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