Netflix plans adverts by end of year
NETFLIX is to introduce adverts and crack down on password sharing by the end of the year as it tries to pull in income amid slowing subscriptions.
The streaming service behind global hit shows including The Crown and Squid Game is preparing to launch its lower-priced subscription tier, supported by advertisements, in the last three months of 2022, according to CNBC.
Netflix executives had previously announced they would introduce the service within “the next year or two”.
It comes as the £64bn company grapples with poor subscriber growth.
New sign-ups fell by 200,000 in the first three months of the year, with critics taking aim at its failure to produce enough hit shows. In January, it posted its slowest annual growth since 2015 and predicted its worst start to a new year for 13 years due to a “Covid overhang”.
Already harbouring debts of around $15bn (£12bn), Netflix is losing billions of dollars a year as many viewers watch shows for free using others’ passwords. Competition, meanwhile, is ramping up from the likes of Prime Video and Apple TV.
Introducing advertising
marks a big shift for Netflix. Last month Reed Hastings, founder and chief executive, said: “It’s not a short-term fix because once you start offering a lowerpriced plan with ads as an option, some consumers take it.
“And we’ve got a big installed base that probably are quite happy where they are.”
Two years ago Mr Hastings spoke of the “controversy around exploiting users with advertising”.
The streaming behemoth’s share price has declined 62pc over the past 12 months as it struggles to combat password-sharing.
Other streaming services such as Spotify have taken a different approach, offering cut-price deals for multi-user subscriptions rather than trying to chase full-price sales from customers.
Netflix has begun to copy such rivals, encouraging customers to sign up for “sub accounts” intended for users who do not live together.
Netflix declined to comment, but a spokesman emphasised that its current subscription service, priced at £15.99 for the high definition 4K premium option, would continue to be offered. Last week, Netflix was sued by shareholders who claim the company misled them about its ability to hold on to customers after it revealed its first subscriber loss in more than a decade.
Investors alleged the streaming service broke securities laws by making “materially false” statements about subscriber growth for the first quarter. Investors said the company misled them about its prospects which led to substantial shareholder losses.
Netflix has been fighting off rising competition from established media giants looking to take their share of the streaming markets. Netflix led the shift towards streaming in the 2000s, but Apple, Amazon and Disney have all started offering similar services.