The streaming platform has announced major changes after losing subscribers for the first time in a decade
The first major drop in subscribers has rocked Netflix and its shareholders, prompting the streaming service to make some changes that were once considered taboo.
Netflix has announced that they are conducting a test Add Home feature. who see the end of account sharing and have confirmed that a cheaper ad-supported tier is in the works.
The company is scrambling to recoup the loss of 200,000 subscribers in the first quarter of 2022.
With a projected loss of another two million subscribers, here’s everything you need to know about the divisive changes the company is making.
Why have the numbers gone down?
Since Netflix launched globally six years ago, it’s only gone from strength to strength.
When the first Covid-19 lockdowns were introduced in early 2020, there was an influx of new customers who were stuck at home and had more free time to consume their content.
But since many lockdowns were lifted, the demand for such content has declined.
Since then, genuine streaming competitors have also sprung up, including Apple TV+ and Disney+ — both overseen by companies with huge budgets — attacking Netflix’s once-dominant market share.
The drop is also partly due to Netflix’s decision to pull out of Russia in protest of the war on Ukraine, which resulted in an immediate loss of 700,000 subscribers.
Then there’s the ongoing cost-of-living crisis, which has led to families choosing to ditch streaming services to focus on more important things as budgets tighten.
Netflix forecast a loss of another two million subscribers for the current quarter from April to June 2022.
Will Netflix End Account Sharing?
Netflix has announced that they will be testing an add-a-home feature in their next update.
It will effectively spell the end of account sharing, which has long been the norm among Netflix subscribers.
Multiple profiles are allowed on the same account — for example, when shared in a family — but some users take it a step further, willingly sharing their passwords with friends, effectively giving them free access to the streaming service.
The California-based company estimates that around 100 million homes worldwide watch its service for free using a friend’s or other family member’s account, including 30 million in the US and Canada.
The Add Home feature currently being tested in Argentina, Dominican Republic, El Salvador, Guatemala and Honduras will result in users having to pay for sharing their password.
Users will be charged for the ability to share their accounts and use new devices.
Prices are expected to be lower than the subscription fee, but if you use an additional device to watch Netflix outside of your home, you’ll have to pay for the privilege.
Here’s how the Add Home feature works:
- One Home per Account: Each Netflix account comes with one Home
- Buy Additional Homes: To use your Netflix account in additional homes, you must pay
- Travel included: You can watch on your tablet, laptop or mobile phone while you’re on the go
- New Manage Houses feature: You can control where your account is used and remove houses at any time
Will Netflix introduce advertising?
The company didn’t offer any additional information on how a cheaper ad-supported tier would work or how much it would cost.
Other streaming services allow ad-supported content and offer much cheaper subscription alternatives in exchange for the mild annoyance of having to sit through ads.
Others can provide content to users completely free of charge and are funded entirely by advertising revenue.
On the question, Hastings said, “Those who have followed Netflix know that I was anti-complexity of advertising and a big fan of the simplicity of subscriptions. I’m a bigger fan of consumer choice.”
He added that “it’s pretty clear” that ad-supported services work for rivals Disney and HBO.
How likely are the changes?
It will all depend on how the process goes for the proposed changes.
Netflix’s initial loss of subscribers has seen its shares plummet more than 25% in extended trading — if that stock decline continues, shares could lose more than half their previous value this year — and about $150 billion ($115 billion pounds). into shareholder assets in less than four months.
So the company will be keen to recoup its losses, although it has to be careful about how it does so.
In 2011, the streamer was met with customer reaction when it revealed plans to start charging its then-nascent streaming service, which had previously been bundled for free with its traditional DVD-by-mail service prior to its international expansion.
The changes outlined above would likely not be welcomed by current subscribers.