Netflix is facing one of its toughest challenges in years with the streaming firm announcing that it has lost customers for the first time in a decade. It’s thought some 200,000 users have switched off their accounts since the start of the year with forecasts suggesting that this could grow to over two million by the summer. Netflix was expecting to grow its user base in 2022 but instead, it appears that consumers are actually hitting cancel rather than the “sign me up” button.
With so many people leaving, Netflix desperately needs to try something new and that means we could soon see an updated subscription tier launching that will include adverts for the very first time.
By introducing sponsored messages, Netflix could drop the price for those happy to watch adverts during their evening binges.
Netflix has always been against bringing ads to its platform but with the cost of living increasing and consumers looking at their finances, this change could be vital to its future growth.
“Those who have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription,” said Netflix boss Reed Hastings during a quarterly earnings call with investors.
“But as much as I’m a fan of that, I’m a bigger fan of consumer choice. Allowing consumers who would like to have lower price and are advertising tolerant get what they want makes a lot of sense.“
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Although Netflix is clearly considering adverts it doesn’t appear that major changes will be coming anytime soon with the company saying it’s currently looking into the implications and will make decisions over the next year or two.
There’s also no word on how much cheaper the ad-supported tier will be although a basic plan currently costs £6.99 so we’d expect it to be considerably cheaper than that.
If Netflix does introduce adverts it will follow a similar move by Disney+.
The advert-supported tier will be introduced in the United States before the end of this year, before rolling out internationally next year.
Expanding access to Disney+ to a broader audience at a lower price point is a win for everyone – consumers, advertisers, and our storytellers,” said Kareem Daniel, Chairman, Disney Media and Entertainment Distribution. “More consumers will be able to access our amazing content. Advertisers will be able to reach a wider audience, and our storytellers will be able to share their incredible work with more fans and families.”
News of the subscription losses has hit Netflix hard with the company seeing a 17 percent fall in its share price.
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