Netflix looks set to introduce some significant changes to its streaming strategy after missing its subscriber forecast during the first quarter of 2022.
Across the globe, the streaming service lost 200,000 subscribers, with another 2 million expected to leave by the time the next earnings call is held in July.
The service has recently announced price increases in some countries, which have likely impacted the uptake of the service.
“Our revenue growth has slowed considerably,” the firm told shareholders on Tuesday after the disappointing results went public.
“Our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds.”
The company estimates that more than 100 million households are breaking its policy by sharing passwords.
“We’ve always tried to make sharing within a member’s household easy, with features like profiles and multiple streams,” Netflix said in its statement to shareholders.
“While these have been very popular, they’ve created confusion about when and how Netflix can be shared with other households.”
“When we were growing fast, it wasn’t a high priority to work on [account sharing]. And now we’re working super hard on it,” Reed Hastings told shareholders, hinting that a plan is in place to turn the people using an account they don’t own into full-fledged subscribers.
Account-holders in Chile, Costa Rica, and Peru have to pay to add profiles for users outside their households.
Since last month, the test has been ongoing to assess whether it is worthwhile to employ in other countries.
Users can add up to two extra profiles for people outside the house for a fee.
“We really see that second group as a tremendous opportunity, because they’re clearly well qualified,” Netflix’s Chief Operating Officer Greg Peters said during Tuesday’s earnings call.
“And so now our job is to better translate that viewing and the value that those consumers are getting into revenue.
As another way to stall the erosion in its subscriber base, the streamer is also said to be exploring an ad-supported plan.
This would come at a lower cost, but it’s unclear when this could launch.
Hulu, Paramount+, HBO Max, Discovery+, and Peacock have ad-supported offerings, so it appears to be the natural next step for the service.
What are your thoughts on the state of the streaming service?
Do you think an ad-supported plan would work?
Hit the comments below.