An unexpectedly sharp drop in subscribers has Netflix considering changes to its service that it has long resisted: minimizing password sharing and creating a low-cost subscription supported by advertising.
FILE- A Netflix logo is displayed on an iPhone in Philadelphia on July 17, 2017. Netflix is confronting a reckoning that will result in new barriers to prevent its video streaming service’s subscribers from sharing their passwords beyond their households and possibly inject ads into its programming line-up for the first time.
Netflix's customer base fell by 200,000 subscribers during the January-March quarter, the first contraction it's seen since the streaming service became available throughout most of the world outside of China six years ago. The drop stemmed in part from Netflix's decision to withdraw from Russia to protest the war against Ukraine, resulting in a loss of 700,000 subscribers. Netflix projected a loss of another 2 million subscribers in the current April-June quarter.
The Los Gatos, California, company estimated that about 100 million households worldwide are watching its service for free by using the account of a friend or another family member, including 30 million in the U.S. and Canada. “”Those are over 100 million households already are choosing to view Netflix,” Hastings said. “We’ve just got to get paid at some degree for them.”
While Netflix clearly believes these changes will help it build upon its current 221.6 million worldwide subscribers, the moves also risk alienating customers to the point they cancel the service. But Netflix CEO Reed Hastings now believes those outsized gains may have blinded management. “COVID created a lot of noise on how to read the situation,” he said in a video conference Tuesday.
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