Netflix reported its worst quarter earlier this year and the company is set to make changes regarding how it operates.
Video streaming platform Netflix is reportedly considering introducing ads to its viewers. The company has been operating a non-ad model over the past few years but this could change any time soon.
A source familiar with the matter told CNBC that Netflix could roll out its lower-price, ad-supported tier before the end of the year. The source said the company had notified its employees that the ad-supported tier could be introduced in the fourth quarter of the year.
By introducing an ad-supported tier, Netflix hopes to attract more users, generate more revenue from their subscription and also generate revenue from the adverts displayed to the viewers.
During the company’s Q1 earnings conference call a few weeks ago, co-CEO Reed Hastings said Netflix is still figuring out the model. At the time, he said an ad-supported option wouldn’t be available on the service for a year or two.
However, the video-streaming company has struggled with a stagnating subscriber base in recent quarters. In the first quarter of the year, Netflix lost more than 200,000 subscribers, causing its stock price to plunge by more than 30% within a few hours.
Since the start of the year, Netflix’s stock has lost more than 70% of its value. An ad-supported tier could help the company attract and retain price-conscious consumers.
The company is also expected to crack down on password sharing before the end of the year. Netflix said last more that roughly 100 million households globally use a shared password to access its contents. It added that most of the shared passwords happen in Canada and the United States.
The shared password has negatively affected Netflix’s revenue and subscriber growth, the company added.
