After a disappointing quarterly earnings report, Netflix has admitted to making some changes that might have been unheard of a few years ago. Namely the addition of an ad-supported Netflix membership tier and a crackdown on subscribers that share passwords with others outside their household.
This comes after Netflix announced they had lost 200,000 subscribers in a period that was predicted to instead grow by 2.5 million. The company cited both password sharing and increased competition from other streaming services like Disney+ and HBO Max as the reason for the decrease.
Perhaps anticipating the eventual tumble their stock price would take after this announcement regarding their subscriber numbers, Netflix CEO Reed Hastings acknowledged that incorporating ads in the future can help their revenue grow.
Other streaming services like Hulu that offer both cheaper, ad-supported memberships and ad-free ones actually make more money from the ad-supported plans, despite lower fees. The ad-supported Netflix plans are expected to follow a similar model that offers “consumer choice” between lower-priced plans with ads and more expensive ad-free plans.
While addressing investors, the company said to expect this change in the “next year or two.”
The next big change that Netflix addressed with their investors was creating a solution for the estimated 100 million people who use Netflix for free with a “borrowed” password. They don’t want to wipe out password sharing entirely, but charge users to do it. A similar approach has been tested in some international markets.
Altogether, the password sharing crackdown is expected to come in about a year.
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