Netflix Will Have 'Multiple Ad Tiers,' Says Co-CEO Ted Sarandos: 'A lot Of People, My Son Included, Are Willing To Watch Ads'

Just a few weeks after launching its ad-supported plan, Netflix Inc. NFLX co-CEO Ted Sarandos said that the streaming giant would soon offer different subscription options with advertisements.

What Happened: During a keynote session at the UBS Global Technology, Media & Telecom Conference, Sarandos discussed Netflix’s ad product among other things. He said the company built the highly-anitcipated ad streaming plan “from scratch” in six months.

“I’d say that advertising for us is crawl, walk, run,” Sarandos said, adding that right now the company is on “crawl” mode.

Though he said there will be “multiple ad tiers over time” at different price points, he added there’s “nothing to talk about yet.”

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Netflix’s ad-supported plan launched on Nov. 3. The plan is available in the U.S. for $6.99 per month. Before and during programs, 15- and 30-second commercials are shown.

Since the ad tier is still in its infancy, Sarandos didn't delve into how it was faring. On a lighter note, he talked about his son’s budget-conscious choices as a young streaming consumer. “A lot of people, my son included, are willing to watch ads and take a lower price.” The co-chief added that catering to that demand opens the market to a “demographic that we’ve not been appealing to before.”

In terms of revenue, Sarandos said the company expects half of the upside from the ad tier to come from the U.S. “I think for most global ad companies, that's about the math… A big chunk of the TV ad market is the U.S.”

On paid sharing, which will begin rolling out in early 2023, Sarandos said he doesn't think "consumers are going to love," the development. Having said that, he added, "We’ve got to land in a way that they will. And they'll see the value in Netflix so much so that they're happy to have their own account."

Sarandos also affirmed that Netflix is not intending to bid on sports rights because “We’ve not seen a profit path to renting big sports today.”

“We are not anti-sports for just pro profit,” he explained.

Why It’s Important: Compared to Disney+ and Hulu, Netflix's ad plan is more affordable. It’s even less expensive than HBO Max.

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