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ARCHIVED - Netflix with adverts? Cheap subscription package proposal after firm loses 200,000 members
The streaming service's profits have "stagnated" prompting the company to look into an alternative viewing option in Spain and elsewhere
For the first time in a decade, Netflix's share price has tumbled after it announced a net loss of 200,000 subscribers in the first three months of the year as it faced stiff competiiton from rivals, and forecast losses of a further two million by July.
The streaming giant, which arrived in Spain in 2015, also estimates that tens of millions of subscribers are flouting its rules and sharing passwords with people outside the household, a practice the company previously described as "something you have to live with", but which it now plans to stamp out by testing a new payment plan where profiles can be added legitimately.
Netflix earned 1.6 billion dollars (1.47 billion euros) in the first quarter of this year, down from 1.7 billion dollars (1.57 billion euros) a year earlier. After announcing its results on Tuesday April 19, the firm's shares fell 28% on the New York Stock Exchange.
And during a virtual address to its investors, Netflix's co-founder Reed Hastings revealed the company is considering offering a subscription model with ads for a lower price, an option that would be available "over the next year or two".
"Those who have followed Netflix know that I have always been against the complexity of advertising and in favour of the simplicity of a subscription," admitted Hastings, who in the face of customer loss now favours a change in principle.
"I'm an even bigger fan of giving consumers choice, and allowing customers who want a lower option and tolerate ads to get it makes a lot of sense. It's something we'll be addressing over the next year or two."
Other competing streaming platforms in the US, such as Hulu and HBO Max, already have cheap subscription options that interrupt the broadcast of series and movies with short commercial breaks.
Indeed, Netflix has linked its "stagnation" to the emergence of new competitors, such as Disney and Apple, but also points out that the suspension of its service in Russia resulted in the loss of 700,000 Russian subscribers.
If the firm had not pulled out of Russia following its invasion of Ukraine, the balance of this quarter would have been very different, with around 500,000 new users, the co-founder insisted. However, this is still a far cry from the growth forecasts it had set for the start of the year; specifically 2.5 million new customers.
And of course, filming stoppages due to Covid also took its toll on growth, together with the aforementioned sharing of account passwords.
According to its internal data, in addition to the nearly 222 million active paid accounts on Netflix, another 100 million households log in with another user's credentials.
"We have to make them pay for it to some extent," said Hastings.
In October of last year, Neflix increased its prices, and last month, the company launched a pilot programme in Chile, Costa Rica and Peru that will charge an additional fee for users who share their account credentials with people living outside the home.
There is no word yet on a rollout in other countries.
Also of interest: How to access the secret back catalogue on Netflix and watch hidden series and films
Image: Pixabay
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