Netflix announced that it is expediting the efforts to curb the “freeloaders” who participate in password sharing. This move came when Netflix announced that in quarter 1, they lost an unexpected amount of subscribers. On top of this, the streaming giant also forecasts a further loss of 2 million subscribers in the 2nd quarter of 2022. The process has already started, even with the outcry from the public surrounding this controversial testing. Netflix has begun testing a new additional fee to add people outside of the household to one’s account. This test takes place in Peru, Costa Rica, and Chile, with plans to expand by the 4th quarter of 2022.
Alongside this announcement, Netflix may dive into a new ad-supported streaming model in quarter 4 of 2022, similar to the model to that of rival Hulu. No specific details of this AVOD have come to the surface. This comes as no surprise, as several competitors of Netflix have similar models. Hulu, HBO Max, Peacock, and Paramount+ are cheaper alternatives to Netflix with a similar model to what Netflix is proposing.
The future looks bleak for the groundbreaking streaming pioneer; the AVOD embrace comes to us at the same time that Netflix execs scramble to recover from the largest drop in Netflix’s share price. Ironically, the embrace comes after years of execs saying they wouldn’t introduce ads to Netflix.
“Those that have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription,” Co-CEO Reed Hastings said in Netflix’s Quarter 1 earnings interview. “But as much as I’m a fan of that, I’m a bigger fan of consumer choice. And allowing consumers who would like to have a lower price and are advertising-tolerant get what they want, makes a lot of sense.”