Netflix’s latest shareholder letter should be anxiety inducing for anyone using a shared password
At the beginning of this year,Netflix hiked its subscription pricesin the US and Canada again, making it among the most expensive streaming services out there. The company has also beenconsidering putting an end to password sharing, which is rampant among its subscribers. Now, Netflix has confirmed it will be pushing ahead with its plans to change its rules on password sharing as the streaming service saw its subscribe base shrink for the first time in over a decade. It lost over 200,000 subscribers in the first quarter of the year and saw its revenue growth slow down considerably.
The decline in the subscriber base is primarily because Netflix left the Russian market due to the ongoing war resulting in a loss of 700,000 subscribers. The company, however, admits that it is not growing at the same pace as before, and things are unlikely to change soon. Worse, it expects to lose another 2 million subscribers in Q2, 2022. In a bid to arrest the revenue decline, the streaming company plans to monetize account sharing and even introduce an ad-supported tier at a lower price.
In its quarterly earnings announcement,Netflix claims its serviceis being shared in over 100 million households. The company already offers its subscribers in Peru, Chile, and Costa Rica to add anextra member to their account for a reduced monthly price. The service expects to monetize this user base in other parts of the world in the coming future, with Netflix COO Greg Peters (viaProtocol) saying it could take a year for the changes to roll out.
During the earnings call, Netflix co-CEO Reed Hastings confirmed that the streaming service is open to launching a lower-priced plan with ads for subscribers who want a cheaper plan and don’t mind watching ads. The company is still exploring this idea and could launch an ad-supported tier in the next couple of years.
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