An unexpectedly sharp drop in subscriber numbers has prompted Netflix to consider changes to its service that it has long resisted, such as: B. Minimizing password sharing and creating a low-cost subscription supported by advertising.
The changes, announced late Tuesday, are intended to help Netflix regain momentum it lost over the past year.
Pandemic-related lockdowns that have fueled binge-watching have been lifted, while deep-pocket rivals like Apple and Walt Disney began retaliating against its massive audience with their own streaming services.
Netflix’s subscriber base fell by 200,000 subscribers in the January-March quarter, the first drop since the streaming service became available in most parts of the world six years ago.
The drop was partly due to Netflix’s decision to pull out of Russia in protest of the war on Ukraine, resulting in a loss of 700,000 subscribers.
Netflix forecast a loss of another two million subscribers for the current April-June quarter.
The erosion, stemming from a year of progressively slower growth, has rocked another key constituency for Netflix — its shareholders. After announcing its disappointing performance, Netflix stock plunged more than 25% in extended trading.
If the stock decline extends into Wednesday’s regular trading session, Netflix shares will have lost more than half their value so far this year – wiping out around $150 billion (£115 billion) of shareholder wealth in less than four months .
The California-based company estimates that around 100 million homes worldwide watch its service for free using a friend’s or other family member’s account, including 30 million in the US and Canada.
Netflix announced that it will expand a trial program it has been running in Chile, Costa Rica and Peru, where subscribers can extend the service to another household at a discounted rate.
The company didn’t offer any additional information on how a cheaper ad-supported tier would work or how much it would cost. Another competitor, Hulu, has long offered an ad-supported option.
Netflix hopes these changes will help it build on its current 221.6 million subscribers worldwide, but they also risk alienating customers to the point of canceling the service.
The streamer was met with customer reaction back in 2011 when it revealed plans to start charging its then-nascent streaming service, which had previously been bundled for free with its traditional DVD-by-mail service prior to its international expansion.
In the months following this change, Netflix lost 800,000 subscribers.
Tuesday’s announcement was a sobering descent for a company that enjoyed a resurgence two years ago as millions of consumers stuck at home desperately sought distraction. Netflix added 36 million subscribers in 2020.
But Chief Executive Reed Hastings believes those outsized gains may have blinded management, telling a video conference call on Tuesday: “Covid has made a lot of noise about how to read the situation.”
Netflix took a new direction last year when its service added video games at no extra cost to give people another reason to subscribe.
Escalating inflation over the past year has also weighed on household budgets, prompting more consumers to rein in spending on non-durable goods. Despite these pressures, Netflix recently increased its prices in the US, where it has the greatest household penetration — and where it’s had the most trouble finding more subscribers.
Netflix lost 640,000 subscribers in the U.S. and Canada last quarter, prompting management to indicate that most of its future growth will come from international markets. Netflix ended March with 74.6 million subscribers in the US and Canada.
https://www.independent.ie/world-news/netflix-aims-to-curb-password-sharing-and-bring-in-ads-after-subscriptions-drop-41569092.html Netflix aims to curb password sharing and showing ads after subscriptions end