Netflix CEO Reed Hastings said this week that he regrets his company waited until this year to launch an ad-supported tier. Speaking at The New York Times’ Dealbook conference (via CNBC), the exec said that he previously didn’t believe that an ad-supported business model would work for a platform like Netflix.

“I didn’t believe in the ad-supported tactic for us. I was wrong about that. Hulu proved you could do that at scale and offer customers lower prices. We did switch on that,” Hastings said at the conference. “I wish we had flipped a few years earlier on that, but we’ll catch up.”

Hastings also admitted that he didn’t realize that advertisers were hungry to reach all the cord-cutters who had stopped watching TV. “What I failed to understand is that there is a lot of TV advertising that now couldn’t find the viewers because the 18- to 49-[year old] segment had moved on and were not watching linear TV,” the Netflix CEO said.

Netflix’s new Basic with Ads plan launched in 12 markets last month, and it’s priced at $6.99 in the US. The platform teamed up with Microsoft to show subscribers an average of 4 to 5 minutes of ads per hour that are targeted using their date of birth, gender, and location information.

After losing a million subscribers in the second quarter of 2022, Netflix gained 2.4 million subscribers in Q3 and had 233 million subscribers in September. Netflix hopes that its new ad-supported plan will help to sustain this growth, but the company is also increasing its investments in gaming.

As of today, Netflix has five game studios across the world and it’s hiring video game veterans to build its first triple-A PC Game. Hasting also revealed that Netflix failed to acquire Wordle, the web-based word game purchased by The New York Times earlier this year. “I berated our M&A team that we didn’t buy Wordle,” Hastings said at the NYT conference.

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