Netflix stock plummets 37% as CEO says company plans ad-supported tier

Netflix plans to launch a lower-priced subscription tier with ads, CEO Reed Hastings said Tuesday in an interview to discuss first-quarter earnings. Netflix revenue growth is slowing amid a loss in subscribers, and the company's stock price was down about 37 percent Wednesday as of this writing.

Hastings said that an ad-supported tier is something "we're trying to figure out over the next year or two" and that Netflix is "quite open to offering even lower prices with advertising as a consumer choice." "Those who follow Netflix know I've been against the complexity of advertising and a big fan of the simplicity of subscription," Hastings said. "But as much as I'm a fan of that, I'm a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and are advertising-tolerant get what they want makes a lot of sense."

When asked if Netflix will test an ad-supported plan in small markets before a global rollout, Hastings suggested he doesn't think that will be necessary. "No, I think it's pretty clear that it's working for Hulu. Disney's doing it; HBO did it. I don't think we have a lot of doubt that it works. You know that all those companies have figured it out. I'm sure we'll just get in and figure it out as opposed to test it and maybe do it or not do it."