Netflix Might Bring In Ads For Low-Cost Subscriptions
Netflix may be going towards the low-cost subscriptions with ads plan due to the increased culture of password sharing and Netflix not getting any benefits.
Netflix is exploring modifications to its platform that it has long opposed, such as limiting password sharing and introducing a low-cost plan backed by advertisements, as a result of an unexpectedly significant loss in members.
During the first quarter of the year, Netflix’s member base shrank by 200,000, the first decline because the streaming giant became accessible in much of the globe beyond China back in 2016. The decline was attributed in part to Netflix’s decision to leave Russia in protest of the war in Ukraine, which resulted in a 700,000 user loss. In the present second quarter of the year, Netflix expects to lose another 2 million customers.
The impending adjustments, which were unveiled late Tuesday, are aimed to assist Netflix to recapture the pace it had lost during the previous year. Pandemic-driven quarantines that fueled binge-watching have dropped, while strong competitors like Apple and Disney have begun to nibble away at the company’s massive fanbase with their own subscription services similar to Netflix.
Netflix’s stockholders have been worried by the decline, which comes after a year of gradually sluggish growth. Netflix’s stock plummeted by more than 25% in trading today after the company revealed its poor results. If the company’s decline continues into Wednesday’s normal trading day, Netflix’s stock would have lost over half of its value in 2022, wiping out approximately $150 billion in corporate value in less than 4 months.
It was estimated that around 100 million families around the world are using the streaming service for free by sharing passwords. Reed Hastings, the CEO of Netflix, believes that it is only fair if they get paid for that too. Netflix did not provide any more details on how or how much a lower ad-supported subscription tier would function or cost.
Netflix has announced that a trial programme it has been operating in multiple Latin countries like Peru, Costa Rica, and Chile — will be expanded to encourage more individuals to pay for the accounts themselves. Customers can increase coverage to another home for a subsidised fee in certain places.
Tuesday’s news was a harsh reality check for a corporation that had been riding high two years back when millions around the world cooped up at home were starving for entertainment — a need Netflix was pleased to fill. Netflix attracted 36 million new customers in 2020, the greatest yearly increase since the company launched its video streaming service in 2007.
The year before, Netflix took a step in a different direction when it included online games in its service for no extra price in a bid to get consumers to join.
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