Netflix Considers Ad-Supported Streaming After Big Drop in Subscriptions

By Samona Punjabi / April 21, 2022

In the past year, Netflix has seen a massive decline in subscriptions. The company attributed its subscriber drop to password sharing, household account options, and increasing competition. In addition to these factors, the company has also cited wider economic aspects like inflation and Russia's invasion of Ukraine.

Netflix's suspension in Russia has resulted in a loss of 700,000 subscriptions. Moreover, the streaming giant has projected a further decrease of around 2 million subscribers for the April-June period. Hence, a low-cost ad-supported subscription would be an attempt by the company to prevent the subscription drop. Due to these factors, the company's stock price has fallen by about 25% in the past year.

Netflix To Opt For a Low-Cost Ad-Supported Subscription Tier?

On Tuesday, Netflix's CEO, Reed Hastings, said that the company is considering introducing an ad-supported streaming tier at a lower subscription cost. Speaking about the decision, he said, "Those that have followed Netflix know that I've been against the complexity of advertising and a big fan of the simplicity of subscription. But as much as I'm a fan of that, I'm a bigger fan of consumer choice. And allowing consumers who would like to have a lower price and are advertising-tolerant, get what they want, makes a lot of sense."

While the news is unfortunate, Hastings' statement comes right after Netflix's recent announcement of losing about 200,000 subscribers in the January to March period. The company had projected a 2.5 million rise in subscribers earlier for the same period but saw a massive drop instead. Even more surprising is that this is the streaming giant's first plunge in subscriptions in a decade!

Netflix recently implemented a price increase in subscription plans in the United States and Canada earlier this year. While Netflix has made the above announcement, no other details about the new subscription model have been declared.

Read Next: Netflix Tests Charging a Fee to Share Accounts

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