Mike Peterson
Netflix is reportedly planning on launching a cheaper ad-supported tier in late 2022, around the same time as it begins cracking down on password sharing.
The streaming giant told employees of the planned changes in an internal letter obtained by The New York Times. Although the company informed employees of the changes, it didn't offer many details about them.
During its last earnings call, Netflix CEO Reed Hastings said the company would take time to roll out an ad-based tier, stating that it would "figure it out over the next year or two."
However, in its internal letter, the company appears to have accelerated that timeframe, stating that the planned changes will be "fast and ambitious" and could "require some trade-offs." Netflix pointed out that "every major streaming company excluding Apple has or has announced an ad-supported service" — adding that consumers want "lower-priced options."
Netflix has been bleeding subscribers in recent quarters. In the first quarter of 2022, for example, it lost 200,000 subscribers — its first loss in more than a decade. It also expects to lose two million in the current quarter.
Although Netflix recently hiked prices across its various subscriptions, it has partly blamed the subscriber loss to password sharing.
The company plans on deploying measures to crack down on the practice later in 2022. In the internal letter, Netflix characterized the clampdowns as allowing users to "easily and securely" share their passwords at the cost of "paying a bit more."
Netflix said it would test those changes in specific regions, but didn't make it clear when it would roll them out more broadly. However, Netflix told employees that those mechanisms would debut "around the same time" as its ad-supported tier.
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35 Comments
Good. Final reason to dump it.
What I want to know is this... When watching a show on ad-free Hulu, one can tell where the commercials would be placed by a half second pause where the screen goes black. If commercials weren't a thing it would seem like bad editing. Netflix shows generally do not have these brief pauses, which makes some of their shows feel more cinematic or similar to an HBO show. I would even argue that it elevates the quality of a show. So... Would a commercial based Netflix plan just start playing ads at random? Would it be like how a YouTube video gets suddenly interrupted at the most inconvenient mid-sentence interval? Will Netflix start adding brief pauses to future programming?
There’s a huge window for Apple to take share but I have a feeling they won’t take advantage of it.
Netflix had lived in an echo chamber so long that I think they have convinced themselves of what their problems are but in reality they have no real clue. (Or maybe they really do know what the problems are but are in denial).