Wednesday, May 11, 2022

Netflix May Add Ads Plan Before End of '22

Netflix may introduce a lower-priced ad-supported tier by the end of the year, a much quicker timeline than originally expected, according to The NY Post citing a new report.

Netflix delivered the news to employees in a memo, which said they were aiming to introduce ads in the final three months of the year. The company added that it will likely begin cracking down on password sharing among subscribers around the same time.

The news is a major reversal for the streaming giant, which, for years, had adamantly denied considering advertising. The change of heart came after Netflix reported its first loss in subscribers since 2011.

That caused co-CEOs Reed Hastings and Ted Sarandos to reconsider ads to drum up more revenue, as well as limiting password sharing in order to capitalize on its large customer base.

Changes in Netflix’s business plan come as the streaming giant faces significant challenges. The streamer, which has 221.6 million subscribers, lost 200,000 subscribers in the first quarter and expects to lose 2 million next quarter.

Since the subscriber announcement in April, Netflix’s share price has gone into freefall, erasing roughly $70 billion in the company’s market capitalization. The company cited the pulling out of Russia, as well as the waning of the pandemic, which supercharged Netflix’s subscriber base.

Netflix is also losing customers to competitors such as Disney, Warner Bros. Discovery, Paramount Global, NBCUniversal, and Apple TV+.

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