Netflix has continued to dominate the consumer market for the last decade. However, the most recent quarter didn’t quite work in favor of the streaming giant. To fix their decline, the company is planning to introduce some new plans.
Netflix disclosed in their first-quarter 2022 earnings release that the company lost 200,000 subscribers. It also expects to lose another 2 million in the current second quarter. Naturally, they have a plan to rectify their recent sink. This marks the first time in the last ten years that the company has lost its paid customers.
On Tuesday, Netflix co-CEO Reed Hastings announced that the company is looking to explore cheaper ad-supported plans. Since they are lowering the subscription price, they’ll look to compensate it with ad revenue, which is frowned upon by many.
“Those who have followed Netflix know I’ve been against the complexity of advertising and in favor of the simplicity of a subscription. But as much as I’m a fan of that, I’m a bigger fan of consumer choice,” Hastings said.
He added, “And allowing consumers who would like to have a lower choice and are advertising tolerant get what they want makes a lot of sense. That’s something we’re looking at now and figure out over the next year or two, but think of us as quite open to offering even lower prices with advertising as a consumer choice.”
We noted earlier that Netflix is testing a new system to prevent widespread password sharing. The company also pointed out subscribers sharing passwords with friends and family was one of the causes of their Q1 plunge.
Plans might get cheaper, but the consumer market is known to despise adverts. This move might end up backfiring on Netflix. We will see what happens when they roll this plan.
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