While Netflix has just lost subscribers for the first time in more than a decade, the streaming giant is now planning to introduce ads on its platform by the end of the year. At the same time, the firm should begin to further regulate the sharing of passwords.
Netflix is on the decline
When announcing the company’s financial results for the first quarter of 2022, Reed Hastings, co-chief executive of Netflix, told investors that the company would look into the possibility of introducing advertising and that it would try to ” find a solution within the next two years “. However, according to an internal note consulted by the New York Timesthis deadline would in fact be much closer and would be during the last three months of 2022.
The video game market will exceed $200 billion in 2022
However, Netflix has always argued against advertising on its platform, but it would now be an effective way to bail out the coffers, while it is losing momentum and must face ever fiercer competitors. In Q1 2022, the streaming service lost 200,000 subscribers; since that announcement, its stock price has fallen sharply, wiping out about $70 billion of the company’s market capitalization. In addition, a drop in morale and a loss of confidence took hold of the company’s employees, while its shareholders filed a complaint against it, explaining that it had been led astray by the latter.
A cheaper offer but with advertising, as with competitors
To justify its choice to rely on advertising, Reed Hastings cited its competitors, all of which, apart from Apple TV+, offer an advertising-supported offer: “ All of the major streaming companies except Apple have or have announced an ad-supported service. For a good reason, people want cheaper options “, he explains in the internal memo.
By offering an offer supported by advertising, Netflix could thus offer cheaper subscriptions. Because in addition to the quality of content from competitors, they generally offer less expensive subscriptions than Netflix, causing consumers to switch to these other offers. To make matters worse, Netflix has repeatedly increased the price of its subscriptions, and it seems that the platform realizes that this maneuver is not necessarily the best to adopt to continue to grow.
Until recently, Netflix categorically refused to introduce advertising on its platform. Photography: charlesdeluvio / Unsplash
Additionally, Netflix has expressed interest in setting up ad infrastructure externally, including with a company called The Trade Desk, which helps advertisers place ads on various internet platforms. Importantly, The Trade Desk has David Wells, Netflix’s former CFO, as a board member, and is in touch with the platform.
Netflix will also attack the sharing of passwords
Another solution for Netflix is to regulate the sharing of passwords. Earlier this year, the firm explained that it was testing a feature to charge more for people sharing their account with relatives who do not live in the same household. ” So if you have a sister, say, who lives in another city – you want to share Netflix with her, that’s great. We’re not trying to stop this sharing, but we’re going to ask you to pay a little extra to be able to share with her. says Netflix Chief Operating Officer Greg Peters.
The company estimates that more than 100 million households worldwide use a shared password to access its content, including 30 million in the United States and Canada. While waiting for these various measures to be put in place and to find out if they work, Netflix’s bad patch will continue; the service expects to lose 2 million additional subscribers in the coming months.