Netflix's ad-supported plan and password sharing fees may arrive this year

The company is playing catch up to other services with more affordable plans.

Denis Balibouse / reuters

Although Netflix had long said its service wouldn't include ads, it revealed last month that it will actually roll out a cheaper, ad-supported plan. Co-CEO Reed Hastings said on an earnings call that plans for that tier would be firmed up "over the next year or two." However, it seems the company is looking to offer the option even sooner. It reportedly suggested in an internal memo that an ad-supported version of the streaming service will emerge later this year.

Executives told staff in the note that they want to introduce an ad-supported plan in the last three months of 2022, according to The New York Times. What's more, the note suggested the tier will be introduced around the same time as an extra fee for subscribers who share their passwords with people living at different addresses.

In the memo, Netflix is said to have noted that, outside of Apple TV+, every major streaming platform offers a lower-cost, ad-supported plan. Those include Hulu, HBO Max and Peacock. The company reportedly said that some of its competitors have still been able to “maintain strong brands" while showing commercials.

Meanwhile, Netflix recently said that more than 222 million households are paid subscribers. However, it claimed more than 100 million households are watching Netflix on someone else's account without paying for access. On the earnings call, chief operating officer Greg Peters said that while the company is “not trying to shut down that sharing," it is "going to ask you to pay a bit more to be able to share.” Netflix started testing an extra fee for account sharers in Peru, Chile and Costa Rica in March.

After years of impressive growth, Netflix suddenly has a big issue when it comes to subscriber numbers, which fell for the first time last quarter. It lost 200,000 members (largely due to shutting down its service in Russia) and it thinks it may lose as many as another two million this quarter. With its stock nosediving by over 50 percent in the last month, the company is hoping an ad-supported tier and extra charges for password sharing will help increase revenue.