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Netflix preps for an ad-supported tier and a password crackdown

The streaming service will add an ad-supported tier at lower prices in early 2023

Bright colorful illustration of Netflix logo Illustration: Ariel Davis for Polygon

In an effort to attract new subscribers after numbers began plummeting in early 2022, Netflix is finally gearing up to launch a lower-priced, ad-supported service tier.

In the company’s quarterly shareholder report, Netflix announced that it intends to launch its ad-supported tier in “the early part of 2023.”

The new ad-supported plan is meant to complement the company’s existing paid subscription tiers, which will remain ad-free. Further details were not disclosed, so it’s unknown whether the company intends to restrict content for paid subscribers, like competitor Peacock does, or if ads will be the only difference.

The move comes after a reported loss of 970,000 subscribers in the second quarter, which already is nearly half of the 2 million users the company projected it would lose back in April, when the company said it had lost 200,000 paying viewers. Spurred by the dour outlook, the company made a series of dramatic layoffs and strategic pivots.

Netflix’s new ad-supported tier will be one tactic as the the company attempts to reverse its spiraling viewership. Other measures include recent price hikes and attempts to crack down on password sharing which the company is already testing in Latin American markets. In Netflix’s second quarter report, the company called that remedy “paid sharing,” and told investors it plans to roll out anti-password sharing measures across its global installation base sometime in 2023.

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