%Netflix () chief executive officer (CEO) Ted Sarandos has confirmed that the streaming giant plans to introduce advertising on its platform later this year.
Sarandos said that an ad-supported tier is coming to Netflix at an international advertising conference.
“We’ve left a big customer segment off the table, which is people who say: ‘Hey, Netflix is too expensive for me and I don’t mind advertising,’” Sarandos said. “We [are] adding an ad tier; we’re not adding ads to Netflix as you know it today. We’re adding an ad tier for folks who say, ‘Hey, I want a lower price and I’ll watch ads.’”
Netflix’s plan to launch the new, cheaper ad-supported tier follows news that it lost subscribers for the first time in over a decade last quarter. The company reported a loss of 200,000 subscribers in this year’s first quarter.
Even with that loss, Netflix remains the largest streaming service with roughly 222 million subscribers worldwide, but the loss has forced Netflix to rethink its previous stance against advertising. Earlier this week, Netflix announced that it is laying off 300 employees due to slowing growth at the company.
The question now is which advertising sales company will Netflix partner with to help it launch its new streaming tier.
Media reports say that %NBCUniversal () and %Google () are top contenders. There have also been media reports that Netflix is considering buying %Roku (), a company that makes internet-connected television sets and has a large online ad business.
However, Sarandos shot down the rumors that Netflix is looking to buy a streaming hardware company such as Roku. “We don’t need it,” Sarandos said at the conference.
Netflix’s plan for a cheaper, advertising supported streaming tier mirrors a similar move by rival streaming platform Disney+ (DIS), which plans to launch a similar offering by year’s end.
Disney has said that it plans to launch its ad-supported streaming tier in the U.S. first, before expanding it internationally in 2023. Neither Netflix or Disney have said how much their ad-supported tiers will cost consumers.
Netflix stock is down 70% so far this year at $181.71 U.S. per share.