In recent years, Netflix has seemed like one of the most dominant companies in entertainment. The streaming giant transformed the way we watch TV, but now that it's facing its first real competition, cracks are starting to show in their strategy. On a recent quarterly earnings call, Netflix announced that it had lost subscribers for the first time in a decade, and expected more subscriber loss in the next three months.Netflix is facing its first real competition.The news that Netflix was losing subscribers led to a more than 30 percent drop in the company's stock and erased $40 billion in value from the company. Netflix said that it had lost subscribers as services like Apple TV Plus, Disney Plus, and HBO Max have emerged as viable alternatives and that more people were watching less TV as pandemic restrictions began to ease around the world.Netflix also blamed password sharing for its growth problems, saying that 100 million people were sharing accounts instead of paying for separate accounts across different households. In response to its subscriber losses, Netflix has announced a two-pronged approach that is designed to ensure the longevity of the company for years to come.Is Netflix adding commercials?Just three months ago, Netflix raised the subscription price for all of its plans, but on their latest earnings call, CEO Reed Hastings said that the company was considering adding a cheaper tier which may keep more users on the platform. He also noted that Hulu and Disney Plus had successfully introduced ad-supported tiers and that Netflix may eventually take a similar path."Those who have followed Netflix know that I have been against the complexity of advertising and a big fan of the simplicity of subscription,” the CEO said. “But as much as I am a fan of that, I am a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and are advertising-tolerant to get what they want makes a lot of sense.” He also said that it may take up two years for this new ad-supported tier to become available.Netflix is cracking down on password sharing.The other major shift in Netflix's strategy is a crackdown on password sharing that's designed to ensure Netflix sees a cut of the money that comes from accounts that span multiple households. In Chile, Costa Rica, and Peru, the company has already begun to charge users $3 to add extra users to their accounts.On their earnings call, the company's chief operating officer Greg Peters said that they “will go through a year or so of iterating, and then deploying that.” The exact details of the plan remain unclear, but he said that the company was trying to find a "balanced approach" in solving the problem.It's clear that Netflix is looking at various ways to instill more confidence in its shareholders following a rocky few days. Some users may be surprised by the idea of Netflix having commercials, but then again, it's the way TV has worked for the majority of its history.
In recent years, Netflix has seemed like one of the most dominant companies in entertainment. The streaming giant transformed the way we watch TV, but now that it's facing its first real competition, cracks are starting to show in their strategy. On a recent quarterly earnings call, Netflix announced that it had lost subscribers for the first time in a decade, and expected more subscriber loss in the next three months.Netflix is facing its first real competition.The news that Netflix was losing subscribers led to a more than 30 percent drop in the company's stock and erased $40 billion in value from the company. Netflix said that it had lost subscribers as services like Apple TV Plus, Disney Plus, and HBO Max have emerged as viable alternatives and that more people were watching less TV as pandemic restrictions began to ease around the world.Netflix also blamed password sharing for its growth problems, saying that 100 million people were sharing accounts instead of paying for separate accounts across different households. In response to its subscriber losses, Netflix has announced a two-pronged approach that is designed to ensure the longevity of the company for years to come.Is Netflix adding commercials?Just three months ago, Netflix raised the subscription price for all of its plans, but on their latest earnings call, CEO Reed Hastings said that the company was considering adding a cheaper tier which may keep more users on the platform. He also noted that Hulu and Disney Plus had successfully introduced ad-supported tiers and that Netflix may eventually take a similar path."Those who have followed Netflix know that I have been against the complexity of advertising and a big fan of the simplicity of subscription,” the CEO said. “But as much as I am a fan of that, I am a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and are advertising-tolerant to get what they want makes a lot of sense.” He also said that it may take up two years for this new ad-supported tier to become available.Netflix is cracking down on password sharing.The other major shift in Netflix's strategy is a crackdown on password sharing that's designed to ensure Netflix sees a cut of the money that comes from accounts that span multiple households. In Chile, Costa Rica, and Peru, the company has already begun to charge users $3 to add extra users to their accounts.On their earnings call, the company's chief operating officer Greg Peters said that they “will go through a year or so of iterating, and then deploying that.” The exact details of the plan remain unclear, but he said that the company was trying to find a "balanced approach" in solving the problem.It's clear that Netflix is looking at various ways to instill more confidence in its shareholders following a rocky few days. Some users may be surprised by the idea of Netflix having commercials, but then again, it's the way TV has worked for the majority of its history.
