Netflix Just Had Its Worst Day Since 2004

The streaming service has suffered several losses in recent months. Between a dip in subscriber count and a stock price nosedive, executives have been forced to rethink their strategy. Among Netflix’s options is introducing an ad-supported subscription, which would come with a lower price tag and therefore appeal to an added range of customers.

In a Q1 earnings interview Tuesday, CEO Reed Hastings mentioned Netflix was open to creating a tier for those who are “advertising-tolerant,” opening the service up to a larger price spread and a new form of revenue. “Those who have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription. But as much I’m [sic] a fan of that, I’m a bigger fan of consumer choice,” Hastings said, adding that Netflix would be exploring the option over the next year or two. Subscribers who aren’t so ad-tolerant would be able to stick with their commercial-free tier.

Netflix is also looking for ways to keep people from mooching off of paying subscribers’ accounts, because, as co-CEO and chief content officer Ted Sarandos said, “it’s harder to get them to join Netflix if they’re already using Netflix.” But from the customer’s end, that’s kind of the point—why individually pay $10-plus a month when you could just as easily not do that? Therefore it’s unlikely that Netflix will ever truly incentivize account-sharing viewers to pay their own way. Instead, the company is looking at implementing a $3 fee to recoup some of Netflix’s losses whenever it notices an account is being shared between people who don’t live at the same address.

Executives say account-sharing simply wasn’t a priority back when Netflix was growing quickly, and now it’s making its way toward the top of the list. But it’s obvious why. The company’s stock price is down 35.12 percent as of this writing, with a relatively sustained downturn since January. Netflix also made $110 million less in Q1 2022 than it did in Q1 2021. That’s likely because its overall subscriber count dropped by about 200,000 in Q1—something Netflix says wouldn’t have been so bad had it not pulled out of Russia, removing 700,000 subscribers from its roster.

Despite it all—and perhaps because of its proposed changes—leadership appears optimistic. “Internally, we’re really geared up,” Hastings said. “This is our time to shine.”

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