Netflix considers ad supported subscriptions and restricting password sharing after losing 200,000 subscribers

In the first quarter of 2022, Netflix lost 200,000 paid subscribers worldwide for the first time in more than a decade. The firm will look to monetize shared accounts while also exploring the possibility of a lower-priced plan that includes advertising in the future.

Netflix’s latest steps toward cord-cutting are a far cry from its previous approach of ignoring account sharing and dismissing ad-supported streaming.” Allowing consumers who would like to have a lower price and are advertising-tolerant to get what they want makes a lot of sense,” said Netflix co-CEO Reed Hastings during the company’s earnings call Tuesday afternoon.

Hastings added that the firm was exploring the option of a lower-cost, ad-supported level at present and might do so in the next two years “Think of us as quite open to offering even lower prices with advertising as a consumer choice,” he said.

At this point, Netflix is focusing on a portion of the market that is well-versed in the service: 100 million households that participate in account sharing. “This is a big opportunity as these households are already watching Netflix and enjoying our service,” the company said in its letter to investors. “While we won’t be able to monetize all of it right now, we believe it’s a large short- to mid-term opportunity.”

Netflix COO Greg Peters noted during the company’s earnings call on Tuesday that it is attempting to make money off account sharing by asking those who share accounts with family members who don’t live in the same household to pay a bit more, a practice the firm began testing in South America recently.

“We’re trying to find a balanced approach here,” Peters said, adding that it may take up to a year to roll out those changes globally. It will take a while to work this out and to get the balance right,” – Greg Peters.

Netflix stated that this decline was due in part to its decision to leave Russia as a result of the country’s invasion of Ukraine, with a net loss of 700,000 subscribers.

In the same vein, Netflix executives acknowledged that they had greatly exaggerated the company’s near-term growth potential after witnessing a large number of subscriber additions early in the epidemic. Instead, Netflix is dealing with a variety of challenges, including continuing COVID-19 concerns and delayed smart TV adoption owing to supply chain issues. Finally, executives specifically mentioned competing in the streaming market against more established rivals — a shift from previous comments.

The company’s stock has tumbled more than 23 percent since Sunday, after Netflix executives said there is no quick fix for those issues and predicted that the firm will lose another 2 million subscribers in Q2, compared to the 1.5 million it gained in Q1. That number alone was enough to send investors fleeing; the stock fell about 23% in after-hours trading.

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