Netflix Co-CEO Reed Hastings said Tuesday that a lower-priced tier with ads is under consideration.
Netflix Inc. disclosed Tuesday that it lost streaming subscribers overall for the first time since the service was in its infancy, and executives expect the same to happen this quarter on a wider scale, news that sent the stock plunging again in extended trading.
Hastings even went so far as to strongly reconsider the idea of introducing an advertising-supported version of Netflix to consumers so they could pay less than its $9.99-per-month ad-free basic plan. Netflix has resisted an ad-supported plan for years. Netflix reported earnings of $1.6 billion, or $3.53 a share, down from $3.75 a share a year ago, when Netflix first revealed its expectations for a severe pullback in new additions after a pandemic-fueled surge in 2020. Netflix revenue improved to $7.87 billion in the quarter from $7.16 billion in the same period a year ago, but missed diminished expectations.
The problem, as executives see it, is the range of new competitors that have arrived in the streaming arena, and the number of customers who are sharing their passwords with potential subscribers who instead use the service for free. In a letter to shareholders announcing the results Tuesday, executives said they estimate 100 million additional households are using accounts owned by their 222 million subscribers.
Indeed, suspension of operations in Russia and “winding-down of all Russian paid memberships” resulted in a loss of 700,000 paid net adds, according to Netflix. Excluding those actions, Netflix would have ended up with paid net additions of 500,000 in the first quarter.
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