For the first time in ten years, Netflix recorded a loss of subscribers last month, and the service expects to see even more users leave in the future. After all, over the past two years, Netflix has seen a steady increase in subscribers during the pandemic, but that has now come to an end.
That is why Netflix is considering offering a cheaper subscription where viewers will also see advertising. The streaming service refers to similar subscriptions with rivals HBO Max and Disney+. While discussing first-quarter results, Netflix CEO Reed Hastings said last month that such a subscription could be coming in the next two years.
“In the long run, they will have no choice but to turn to advertisements,” predicted Tom Evens, professor of media at Ghent University, in this newspaper last month. “That is a gigantic market, about more than 100 billion worldwide. But you also don’t want to upset current customers. That is a difficult balance.”
Share passwords
In addition, the company will also take stricter action against users who share their passwords. About 100 million households would use the streaming service without paying for it. The company would lose billions in revenue every year.
Last month, after announcing the quarterly results, Hastings confirmed in an interview that the practice is “nothing new”, but that work is now underway to convert those millions of viewers into paying subscribers.
“We’ve been thinking about that for a few years now. But when we were growing fast, it wasn’t much of a priority. Now it is,” Hastings said. It will probably not be the intention to restrict the sharing of passwords, but rather to charge paying customers who share an account extra costs.
For example, there is already a pilot project in Chile, Costa Rica and Peru where users who share the password outside their household have to pay extra. The subscriptions for multiple households in South America involve monthly additional costs of between two and three euros. This allows those users to add one to two accounts outside their household to their profile. Netflix has announced that the concept could be rolled out worldwide.
The streaming giant told its shareholders that it will take about a year to implement the new feature. The company says it is still looking at exactly how much the additional costs would be. “We’ve been working on this for over two years (…) just over a year ago, we started some trials,” said Greg Peters, Netflix Chief Product Officer. “We’ve just done the first big tests, but it’s going to take a while to work this out and get that balance right.”
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