The Netflix subscriber drop may be covered by Netflix commercials. According to reports, Netflix customers have been finding ways to reduce cost of paying more than 7.99 a month.
The company says that subscriber sharing may be the reason for the plumet. The streaming platform has dropped by 200,000 subscribers this year.
Co-founder Reed Hastings said for years that he didn’t want to offer advertising and had no problems with password sharing.
But after a 26% drop the company is changing course. Netflix also projected it will shrink by another 2 million customers in the current second quarter, a huge setback for a company that regularly grew by 25 million subscribers or more a year.
“It’s just shocking,” said analyst Michael Nathanson of Moffett Nathanson LLC. “Everything they’ve tried to convince me of over the last five years was given up in one quarter. It’s such an about face.”
Offering Netflix commercials through the platform will allow the company to bring in revenue to compensate for low pricing.
Currently, the platform dominates over streaming platform usage. However, the drop is a warning sign of its competitors.
“Allowing consumers who would like to have lower price and are ad tolerant makes a lot of sense,” Hastings said Tuesday. Netflix will explore the best way to offer advertising over the next couple of years.
The change also comes during the UK war. Russia’s invasion of Ukraine cost the company another 700,000 customers when it had to pull its service in Russia, resulting in a loss of 300,000 customers in the Europe, Middle East and Africa.
New to Netflix
Although there has been a Netflix subscriber drop the company continues to push out major content. The latest documentary air the fall of Abercrombie & Fitch.
The documentary shares the racial disparities and sexual exploitation of the company.
The topic is at the top of social trends.