Netflix is now considering offering a cheaper subscription with advertising. This is a consequence of the fact that they lost subscribers for the first time in a decade – some 200,000 of them. This bombshell comes from Netflix’s recently released quarterly report and CEO Reed Hastings. It’s worth noting that the company had predicted a growth of 2.5 million subscribers in the last earnings call just three months ago.
“Our revenue growth has slowed considerably as our results and forecast below show”, the quarterly report states, before going on to suggest ways to “better monetize” the platform.
According to The Next Web, one of the consequences of the lack of growth is that Netflix will implement a cheaper subscription supported by advertising.
CEO Hastings states the company is “quite open” to trialing ad-supported subscriptions, something he’s been opposed to in the past:
“Those who have followed Netflix have known that I’m against the complexity of advertising and I’m a big fan of the simplicity of subscriptions. But as much as I’m a fan of that, I’m a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and are advertising tolerant get what they want makes a lot of sense.”
Hastings also points out that one of the reasons for the lack of income growth is that more and more people are sharing passwords between households. Consequently, this means that there are fewer paying users, even if they still use Netflix. Netflix has previously stated that they are considering increasing the cost of password-sharing and began testing a payment solution where you add additional users who do not live with you to your account.
Hastings stated “we’ve just got to get paid for them,” referring to the estimated 100 million viewers watching Netflix without paying for it.
Shortly after the earnings call with the loss of subscribers became public, Netflix shares plunged by as much as 25 percent – and dragged a lot of other streaming services down with them.