Ash Francis. An unexpectedly sharp drop in Netflix subscribers has prompted the platform to consider changes it has resisted over several years: minimizing user-shared passwords and creating an affordable service that supports ads.
The changes were announced Tuesday night and are intended to help Netflix regain lost momentum over the past year. Forties associated with the pandemic that triggered audiovisual consumption have risen, with high-budget rivals such as Apple and Disney began to take part in its large audience and its own services broadcast.
The customer base of Netflix fell by 200,000 subscribers in the season between January and March, the first contraction recorded in the six years since the service was available in much of the world outside China. The decline was due to Netflix’s decision to leave Russia in protest of the war against Ukraine, which saw it lose 700,000 subscribers. Netflix estimated that it would lose another two million subscribers in the second quarter of the year.
The decline, after a year of slow growth, has hit another pillar in Netflix, its investors. After posting disappointing results, the company’s shares fell more than 25% in after-hours trading. If the decline continues in trading Wednesday, Netflix shares will lose more than half their value this yearwiped out some $ 150 billion in investor wealth in less than four months.
The Los Gatos, California-based company estimates that about 100 million households worldwide receive its services free of charge with a friend or family account, including 30 million in the United States and Canada. “That’s about 100 million households that have already decided to watch Netflix,” said Reed Hastings, the company’s CEO. “We just have to somehow charge for them.”
To encourage more people to pay their bills, the company will expand a system it has tested in three Latin American countries: Chile, Costa Rica and Peru. At these locations, customers can extend their services to another home at a discounted price. In Costa Rica, for example, Netflix fees range from $ 9 to $ 15 per month, but subscribers can openly share an account with another home for $ 3.
Netflix does not provide more information about how an ad-supported service would work or how much it would cost. Another competitor, Hulu, has been offering a supported ad account for years.