Netflix to Lose 2 Million Subs – Ad-Tier and Password Sharing Lockdown On The Cards

"Expect drastic changes to Netflix soon"

April 2022 Netflix Lineup
Netflix to Lose 2 Million Subs – Ad-Tier and Password Sharing Lockdown On The Cards

Netflix is losing subscribers. The streaming service, which saw a massive spike in new accounts during the global pandemic, is slowly running out of steam. According to Netflix CFO Spence Newman, the platform saw a drop of 200,000 subscribers in Q1 2022 and expects this number to hit around 2 million by the end of the year.

In fact, Netflix has actually lost over 500,000 subscribers in 2022 so far if you take into account the suspension of Russian accounts amid the Ukraine invasion. Originally, Netflix aimed to gain 2.5 million new users in Q1 of 2022 and sadly, the complete opposite has happened.

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As it stands, things aren’t going to change anytime soon for Netflix. The streaming service garnered 1.5 million new subscribers in 2020-2021 and while the platform aimed to grow another 2.5 million by the end of March 2022, the opposite has happened. Netflix is now taking drastic action to recoup these losses by targeting password sharing and ad-supported subscription tiers.

The company says that the loss of subscribers is contributed to a number of factors. Firstly, the service has a relatively high household penetration when it comes to one house sharing a single subscription for the service. This means fewer family members are actually signing up to Netflix when they can benefit from one account under the same roof. Netflix also blames the competition for the subscriber drop.

Netflix estimates that out of its 222 million subscribed households, 100 million users are sharing passwords outside of those houses. The company plans on implementing methods to detect when a user is sharing their account with a friend or someone who is not in the house. In addition, Netflix is focusing on different approaches to monetisation. Implementing an ad-tier model for their service is also on the cards. Netflix already began testing this service in certain regions earlier this year.

While things are looking grim for the service, Netflix isn’t looking at the issue in a negative light. Spence Newman says that while the company doesn’t expect revenue growth to accelerate by the end of 2022, it does feel optimistic about the future. In a statement, Newman says:

“I want to make sure there’s not a read-through from negative two million paid net adds in Q2 that there’s going to be a steady strip-down of negative adds. We’re not expecting our revenue growth to reaccelerate before the end of the year, but we will grow revenue, and there will be paid net add growth. As we get to the back half of the year, Ted talked about the stronger slate, we get further away from some of the big price increases, we get into a stronger seasonal period, so I just want to make sure that’s understood as you think about the full year even though we’re not providing full-year guidance.”

Netflix says they aren’t ready to share how the company will address password sharing but they will take about a year or so of iteration and planning before rolling out the changes globally.

The result would see shared accounts with people outside of the household locked out of accessing Netflix. Instead, these users would have to subscribe to the service separately.

Netflix has some stiff competition ahead of it. Disney+ plans on rolling out across over 50 countries in the coming months. One of which is South Africa. The service not only comes in cheaper than Netflix but also offers a range of Disney-owned content to enjoy.

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Source: IGN

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