What just happened? Change could be coming to Netflix sooner rather than later. In a recent note to employees, executives said they are planning to introduce an ad-supported tier in the fourth quarter of this year. The streaming giant will also begin to crack down on password sharing during the same time frame, the note stated.
The details come from two sources that relayed the information anonymously to The New York Times.
Following a disappointing earnings report last month that saw the company lose 200,000 subscribers, Netflix said it would consider offering a lower-priced, ad-supported tier. At the time, co-chief executive Reed Hastings said they would try to "figure it out over the next year or two."
Sources said the note indicated that "it's faster and ambitious and it will require some trade-offs," and pointed out that every major streaming service except Apple has or has announced an ad-supported service.
Netflix in the note further said it would roll out a plan to charge for account sharing in tandem with an ad-supported tier.
In March, Netflix said it was testing ways to curb account sharing between households. The company doesn't want to ban sharing outright, but it does want all viewers to pay their fair share for consuming its content.
A recent survey conducted by Leichtman Research Group found that nearly a third of all US-based Netflix subscribers share their login credentials between households.
Netflix's stock is up more than 4.5 percent as of writing after shedding nearly 70 percent of its value since the beginning of the year.
Image credit John-Mark