The era of Netflix as the king of streaming services may be coming to an end. After years of constant growth, the company announced earlier this year that its subscriber numbers dropped by 200,000. With that news, Netflix said it was looking at introducing ads in the coming years. Now, The New York Times has heard from employees that the timeline has been accelerated. Ads and password sharing restrictions could be coming this year.
In a notice sent to employees, Netflix management said they were aiming to have an ad-supported tier ready for sign-ups by the fourth quarter of 2022. The last time we heard from Netflix about this, it was a much less firm commitment — more an idea than a promise. Netflix admits the timeline is aggressive, and it may require “some trade-offs.”
The acceleration of advertising plans might have something to do with the market’s reaction. After announcing its subscriber loss, Netflix stock has plummeted 50 percent, and it’s down more than 70 percent since the start of 2022. The company expects subscriber losses to continue, amounting to several million in the coming months. If investors don’t see signs of new initiatives, investors could hammer the stock price even more. Even if customers aren’t crazy about ads, the streaming landscape is thick with ad-supported streaming services like Pluto TV and IMDB TV. These platforms are very popular, but they’re also free.
Netflix has long maintained that it would never add commercials to the service, which was a major differentiator between Netflix and traditional cable TV at the dawn of the streaming era. Even Hulu, which is now available in various ad-free tiers, was completely reliant on ads in the early years. If there is any good news, it’s that Netflix won’t put ads in the current streaming tiers. The basic plan starts at $10 per month and only supports one screen, but you can pay $15.49 for two screens and HD streaming. The top-of-the-line plan with four screens and 4K is $20 per month. Presumably, the ad-supported tier would clock in below the current basic plan.
Netflix’s focus on screen allotments to differentiate its subscription tiers led many customers to believe password sharing would never be actively discouraged, but a cratering stock price can force companies to go back on years of precedent. The note sent to employees confirms there will be additional fees for password sharing around the same time ads appear, but it’s not clear how Netflix will know if you’re just using your account in multiple places or if you’ve given it to someone else. The company will be walking a tightrope as it balances revenue concerns with the risk of alienating users. Many long-time customers will no doubt point out Netflix’s tendency to cancel series after one or two seasons has already pushed them to the brink of canceling.
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