Netflix has seen a drop in subscribers for the first time in about ten years. The company has lost some 200,000 subscribers, which isn’t very much in the grand scheme of things. But it’s enough to get the company worried, since it was predicting an increase in subs not very long ago.
And when companies are worried, things change. Last month, Netflix said that it was looking at ways to clamp down on password sharing. It also, recently, said it didn’t have a massive amount of interest in an ad-supported tier. Well, guess what?
Changes for Netflix
The streaming service, in a letter to its shareholders, says that it estimates that about a third of people using the service aren’t paying for it. Specifically, “…in addition to our 222m paying households, we estimate that Netflix is being shared with over 100m additional households”. That’s not a small number, and if you’re counting dollar signs, that’s a lot of money to see evaporating.
Netflix CEO Reed Hastings said, in a video regarding the company’s first-quarter earnings, “Remember, these are over 100 million households that already are choosing to view Netflix. They love the service. We’ve just gotta get paid in some degree for them.” How? Well, that password-sharing clampdown and incremental payments for extra users is a start.
It’s also possible that Netflix will launch a new ad-supported tier, though there’s no sign of where or when this might happen. In the same earnings video, Hastings said that the company is “…quite open to offering even lower prices with advertising, as a consumer choice.” That’s quite a different tune from the one being played two years ago, when implementing ads on the service was too complicated to consider. There is a vague timeline for this — the service is considering a timeline over the next year or two.
