Netflix recently posted its quarterly report for January – March and it reported that it had a loss of subscribers for the first time in more than a decade. The streaming company expected to add 2.5 million subscribers but instead lost 200,000 subscribers for the first three months of the year. On the day of the report post, Netflix revealed it’s considering adding an ad-supported tier with a lower subscription fee.
The number tanked the company stock, which lost over 25% in after-hours trading.
Netflix CEO, Reed Hastings stated he previously had “been against the complexity of advertising”. It was now clear many consumers wanted the option to pay less in exchange for seeing ads. He is also a “fan of consumer choice” allowing consumers who would like to pay a lower price with ads.
The streaming giant also lost approximately 700,000 subscribers since the platform pulled out of Russia, resulting in a net loss of customers. During the same period, January – March 2021, it recorded an influx of 4 million paying users but now recorded only 0.5 million. This is the first time this has happened since October 2011.
Netflix plans to bring this ad-supported subscription plan in a year or two. Currently, there is a crackdown on password sharing.
Whether the proposed ad-subscription service will be a success solely depends on how much the company charges as well as the ability to maintain an array of an interesting library of content that can beat or at least match that offered by its competitors. However, one of the reasons ads are majorly disliked is that some people feel like it’s an invasion of their privacy.