Well, it’s official. Ads are coming to Netflix. According to Netflix Co-CEO Ted Sarandos, who recently spoke at the Cannes Lions advertising festival (via The Hollywood Reporter), the future of the streaming service will see the addition of adverts as they introduce an ad-supported tier that will come at a lower cost to the subscriber.

“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 at the event regarding the much-discussed idea of adding ads to Netflix. “We’re 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.’”

Historically, Netflix has been averse to ads breaking up the viewing experience of subscribers. But, with the streaming giant facing mounting pressure amid several financial setbacks, Sarandos and the rest of the Netflix head honchos are clearly hoping that adding a lower-cost tier that includes ads will help to solve some of these problems.

Netflix has faced some of the biggest difficulties since its creation in recent months, with the viewership numbers dropping and its share price tanking. Earlier this year, Netflix reported a net loss of 200,000 subscribers globally, with expectations to lose a further two million subscribers over the next few months. With this in mind, Sarandos was asked about a potential buyout. Something which the Netflix Co-CEO did not rule out.

During his appearance at the Cannes Lions advertising festival, Sarandos admitted that the possibility of a buyout “is always a reality, so we have to be wide-eyed about that.” However, Sarandos has not yet given up hope, assuring that the streaming giant can return to growth all on its own. “We have plenty of scale, and profitability and free cash flow to continue to grow this business,” he added.

Netflix Could Team Up with Google to Deliver Ads

     Netflix

So, now that we know an ad-supported tier of Netflix is on the horizon, what might this look like? Recent reports from CNBC have stated that Netflix is shopping for who to unite with in order to deliver these dreaded ads, revealing that the streaming platform has been in talks with none other than Google.

“Sources told CNBC that Netflix has met with Google, which makes most of its revenue from ads,” the report says. “It has also met with Comcast/NBCUniversal and with Roku to discuss ad-sales partnerships, as previously reported by The Information. NBC Universal and Google declined to comment.”

Google powers the ads on what is currently the most popular video platform out there, YouTube, so Netflix turning to them for assistance in delivering this new tier certainly makes sense. A

Despite all these problems and setbacks, Netflix remains the most popular streaming service right now with a huge 225 million subscribers worldwide. With new streaming platforms emerging all the time, Netflix clearly needs to find a way to keep that top spot. But is adding a lower-cost ad-supported tier really the answer?