It’s official: Ads are coming to Netflix.
Netflix co-CEO Ted Sarandos, speaking at the Cannes Lions advertising festival on Thursday, confirmed that the streaming giant’s future will include ads, explaining the about-face. Netflix had long been opposed to advertising on its subscription service, but after it released disappointing figures last quarter showing it had lost 200,000 subscribers, the company said it would introduce a cheaper tier funded by advertising in its service for the purpose of attracting new customers. .
“We left a big customer segment off the table, which was people who say, ‘Hey, Netflix is too expensive for me and I don’t mind advertising,'” Sarandos said Thursday, speaking on the Cannes Lions stage with To balance podcast host Kara Swisher. “We’re adding an ad level, we’re not adding ads to Netflix like you know today. We’re adding an ad level for people who say ‘hey I want a lower price and I’ll watch the ads.’
Netflix’s presence at Cannes Lions – the streamer’s first time attending the global advertising conference – is a clear sign that the company is looking to embrace the advertising industry. Sarandos will also be honored this year with the Cannes Lions’ Entertainment Person of the Year award.
Whether a new tier of advertising will prove the solution to Netflix’s growth woes remains to be seen. As the company’s share price has fallen, there has been growing speculation that the streamer could be the target of a takeover.
Sarandos admitted that a takeover “is still a reality, so we have to keep our eyes wide open”, but insisted that Netflix could return to growth on its own. “We have plenty of scale, profitability and free cash flow to continue to grow this business,” he noted.
The 2022 Cannes Lions run until Friday, June 24.