Netflix could add commercials by end of the year: report

Streaming giant is reportedly introducing ads sooner than previously signaled

Netflix reportedly informed its employees recently that it may roll out a lower-priced streaming option that includes commercials by the end of the year, which is sooner than the company previously signaled. 

Netflix

The Netflix Inc. logo on a laptop computer arranged in the Brooklyn Borough of New York, U.S., on Saturday, Oct. 16, 2021.  ( Gabby Jones/Bloomberg via Getty Images / Getty Images)

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The New York Times reported that Netflix executives recently made the revelation in an internal memo, citing two sources who shared details of the note. According to the outlet, the message stated that a less expensive subscription tier with ads could be introduced in the last three months of 2022, and that the company would start cracking down on customers who share subscriptions at around the same timeframe.

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Netflix did not immediately respond to FOX Business' request for comment.

For years, Netflix has resisted advertising on its platform, instead focusing on adding subscribers. But the company did an about-face last month after losing subscribers for the first time in over a decade.

Netflix

A bowl of popcorn and TV remote control on a coffee table, with Netflix streaming on a television in the background, taken on March 6, 2020.  (Photo by Phil Barker/Future Publishing via Getty Images / Getty Images)

The streaming giant shed 200,000 subscribers in the first quarter, missing its own expectations of gaining 2.5 million over the period. The company said it expected to lose another 2 million global subscribers in the second quarter.

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Netflix has over 222 million paid subscribers, and told shareholders in its earnings letter last month that over 100 million households are using a shared password. The company said at the time that "high household penetration," including the households sharing accounts, combined with competition is "creating revenue growth headwinds." 

Netflix Reed Hastings

Netflix CEO Reed Hastings. Chart: Netflix (Getty Images / Getty Images)

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Netflix CEO Reed Hastings said in the company's latest earnings call that it would "figure out (a plan) over the next year or two" to offer a lower-priced offering with ads, noting that competitors HBO Max and Disney+ had already made the same move.

FOX Business' Julia Musto and Reuters contributed to this story.