Netflix announces a cheaper subscription and a drastic step

In the next two years, Netflix will introduce an ad-supported model.

In the next two years, Netflix will introduce an ad-supported model.Image: imago images / imago images

After Netflix just profited from the pandemic and experienced a sign-up boom, the provider has now come back down to earth. The quarterly figures released on Tuesday are sobering. The streaming service lost around 200,000 subscribers in the first quarter of 2022; this is the first decrease in ten years. Shortly after this announcement stocks fell almost 30 percent in a few hours.

That apparently forced the company to rethink its current business model. In a letter to shareholders Netflix explains the declines in relation to the Ukraine war, among other things. The service was discontinued in Russia, and around 700,000 accounts were lost as a result. As “DWDL” reported, the number of falls in the second quarter should increase to two million.

Is Netflix Account Sharing Ending Soon?

But the fact that many people share their Netflix account also seems to worry the company. Around 100 million households should be able to pass on their Netflix password outside of their own home, without having to pay more money for it, as is the case with other streaming services. And that could soon be the end.

In Chile, Costa Rica and Peru, customers who share an account now have to pay an additional $2.99. So if the project gets off to a good start in South America, other countries could soon follow suit.

Reed Hastins, co-CEO of Netflix, said in a statement to investors that account sharing was not a high priority before, when subscriptions were booming. Now that the situation has changed, things look different.

Netflix wants to introduce a new subscription model

But the company doesn’t see it just as a way to get the numbers back up. Soon there will be a new cheaper subscription model.

Netflix, which has so far managed without any advertising, wants to offer a cheaper subscription that also contains advertising. Except one Price reduction through advertising. Hastings did not elaborate. However, it should take a year or two before the new model is also available.

In the past, the company has always been against funding advertising revenue. However, as Hastings now emphasized, he was “Consumer’s Choice Fanatic.” As Hastings says:

“Giving what they want to consumers who want a lower price and tolerate advertising makes a lot of sense.”

Reed Hastings, Founder and Co-CEO of Netflix

Netflix isn’t the only streaming service making a loss

Not only Netflix is ​​affected by viewer lossesaccording to a study by market researcher Kantar. With inflation and many rising costs, some households would now like to save on entertainment. Netflix has also repeatedly increased its prices in recent years, the premium subscription, for example, now costs 17.99 euros.

Netflix follows its competitor like this, among other things Disney+, which also announced a cheaper subscription with ads a few weeks ago. Many streaming services, such as RTL+ and Joyn, have long been using comparatively lower prices in combination with short advertising clips.


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