Streaming giant Netflix, which has laid off 450 employees in two tranches so far, is set to launch an ad-supported tier by the end of the year to reduce its losses and bring more users on to the platform.
Netflix's Co-CEO Ted Sarandos confirmed during the Cannes Lions advertising festival that the future of the streaming giant will include ads, reports Hollywood Reporter.
"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,'" Sarandos told 'Sway' podcast host Kara Swisher.
Sarandos confirmed that the streaming service is in talks with potential ad-sales partners.
As the company's share price has tanked, there has been growing speculation that Netflix can be acquired soon.
Sarandos admitted that a buyout "is always a reality, so we have to be wide-eyed about that".
However, he insisted that "we have plenty of scale and profitability and free cash flow to continue to grow this business".
Its rival Disney Plus also plans to launch a similar ad-based offering by the end of the year, starting with the US, before going global.
Netflix saw its stock tumbling by 20 per cent after it reported a loss of 2 lakh paid subscribers in the first quarter of 2022, its first subscriber loss in over a decade.
Moreover, it now forecasts a global paid subscriber loss of 20 lakh for the April-June quarter (Q2).
After laying off 150 employees recently, the popular video streaming platform has once again shown the exit door to an additional 300 employees in the second round of layoffs.
The cuts are across multiple business functions in the company, with the bulk of the jobs lost in the US.
The platform has indicated more rounds of layoffs would be coming this year.