Netflix might be speeding up the timeline on introducing an ad-supported option, according to a report obtained by The New York Times.
The streaming giant has been making headlines over recent weeks for abysmal performance, which included a loss of 200,000 subscribers in the first quarter of 2022 and an expected 2 million more to follow in Q2. There are several factors contributing to this, including stiff competition from platforms such as Disney+, Warner Bros. Discovery, Paramount Global, NBCUniversal, and Apple TV+.
Many of these competitors offer cheaper streaming options that earn revenue through ads. Netflix co-CEO Reed Hastings told investors that Netflix would be introducing a similar offering “over the next year or two,” but now an internal memo appears to indicate that the change could happen by the end of this year instead.
“Yes, it’s fast and ambitious and it will require some trade-offs,” the note reportedly said.
Currently, the most popular Netflix plan costs $15.49 a month. A new ad-supported tier would be cheaper, the New York Post reported, noting that HBO Max offers an ad-free option for $15/month and an ad-supported tier for $10/month. Subscribers have been complaining about Netflix raising subscription prices for years.
Netflix has also announced it will start cracking down on password sharing.
According to Netflix, more than 30 million households in North America are sharing an account. Worldwide that number jumps to 100 million, The Daily Wire reported.
“Account sharing as a percentage of our paying membership hasn’t changed much over the years, but, coupled with the first factor [slowed revenue growth], means it’s harder to grow membership in many markets — an issue that was obscured by our COVID growth,” Netflix said in a letter to shareholders following the disappointing first quarter report.
The company has begun experimenting with a password sharing prevention system in Chile, Costa Rica, and Peru which involves users paying extra to provide access to Netflix outside their household, which may include up to two extra profiles costing between $2 and $3 more per month.
“The principle way we have is asking our members to pay a bit more to share the service outside their homes,” Greg Peters, Netflix’s chief product officer, explained. It’s a softer approach to cutting off opportunities for password sharing completely while still aimed at recouping the lost revenue.
Netflix has not announced formal plans for rolling out the program to other countries, including the United States, as of right now.