Netflix’s ad-supported tier, password crackdown may come by end of 2022: report

There may be major changes to Netflix Inc. much earlier than expected.

The New York Times reported on Tuesday that the broadcast giant expects to launch a lower, ad-compatible price level and crack down on password sharing sometime in the last quarter of 2022.

Last month, Netflix co-executive director Reed Hastings said these moves were being considered, but suggested they would take place over the next year or two.

But the Times report, citing two sources who saw details in an internal Netflix communication, said those plans are accelerating as the streaming service expects subscribers to bleed.

After losing 200,000 subscribers in the first quarter, the first significant loss of subscribers since Netflix’s early years, the company said in its April earnings report that it expects to lose 2 million customers in the current quarter. This news sent Netflix shares NFLX,
+ 2.63%
falling; shares have fallen nearly 50% last month and have fallen more than 70% so far.

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While Netflix had for years ruled out the possibility of offering a level with ads, Hastings said in last month’s earnings video that times had changed, citing successful levels with ad support from Netflix rivals. “It’s pretty clear that it works for Hulu, that Disney does it, that HBO did it. I don’t think we have much doubt that it works,” he said. “I’m sure we’ll just go in and find out.”

Meanwhile, the issue of password sharing was ignored or even encouraged for years by Netflix. But executives said in their earnings letter that an estimated 100 million viewers can be taken for free to someone else’s account outside their home. Turning some of these into paid subscribers could significantly increase your worldwide payment user base by 222 million.

Reads: Is Netflix cracking down on password sharing? Here’s what you need to know if you share an account

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