An unexpected drop in subscribers sent Netflix shares into freefall Wednesday, forcing the company to consider experimenting with ads and B次元官网网址� hold onto your remote B次元官网网址� cracking down on millions of freeloaders who use .
The surprising net loss of 200,000 subscribers rattled investors, who had been told by the company to expect a gain of 2.5 million subscribers. Netflix shares sank 35% on the news, falling to their lowest level since early 2018.
The Los Gatos, California, company estimates that about 100 million households worldwide are watching its service for free by using the account of a friend or another family member, including 30 million in the U.S. and Canada. B次元官网网址淭hose are over 100 million households already choosing to view Netflix,B次元官网网址� CEO Reed Hastings said during a shareholder call Tuesday. B次元官网网址淲eB次元官网网址檝e just got to get paid at some degree for them.B次元官网网址�
That may not hurt much at first. Netflix has already been experimenting in Latin America with programs that use a soft touch to convince the unsubscribed to sign up. In Costa Rica, for instance, range from $9 to $15 a month, but subscribers can create sub-accounts for two other individuals outside their household for $3 a month. On Tuesday, Hastings suggested that the company may adopt something similar in other markets.
Some current subscribers, though, say even that relatively gentle nudge might push them to sign off.
Alexander Klein, who lives near Albany, N.Y., has subscribed to Netflix since 2013 and shares his account with his mother-in-law. While he likes the service, a string of price increases and the loss of licensed shows has annoyed him B次元官网网址� and any password-sharing crackdown might be the last straw.
B次元官网网址淚f they start cracking down on password sharing and IB次元官网网址檓 stuck paying the full $15 (a month) just for one person watching at a time, thatB次元官网网址檚 frustrating,B次元官网网址� he said. B次元官网网址淚f they decided to do that IB次元官网网址檇 likely cancel.B次元官网网址�
Despite some fears that a Netflix crackdown on password-sharing could encourage other streaming services to follow suit, experts say thatB次元官网网址檚 not likely.
B次元官网网址淚 think we would see competitors take different strategies here,B次元官网网址� said Raj Venkatesan, a professor of business administration at the University of Virginia. B次元官网网址淪ome will follow the lead of Netflix and crack down on password sharing. Others will use this as a differentiator and promise simplicity by saying you can have one password for the family.B次元官网网址�
For years, amid rapid global growth, Netflix has looked the other way at the not-so-secret practice of subscribers sharing passwords beyond their households. And Hastings has spoken passionately in the past about keeping Netflix ad-free.
But competitive pressure is on the rise. Deep-pocketed rivals such as Apple, Walt Disney and HBO have begun to chip away at NetflixB次元官网网址檚 dominance with their own streaming services. The easing of the pandemic is giving consumers entertainment options beyond binge-watching their favorite shows, and rising inflation is making families think twice about how many different streaming services theyB次元官网网址檙e willing to pay for.
All of this has given investors major jitters for months. The Wednesday selloff came on top of earlier trouble for the stock, which has lost 62 percent of its market value since the end of 2021, erasing $167 billion in shareholder wealth.
Netflix has no choice but to try new ways to boost its profits to appease shareholders, said J. Christopher Hamilton, a Syracuse University professor who studies streaming services.
B次元官网网址淚t feels like this is NetflixB次元官网网址檚 B次元官网网址榗ome-to-JesusB次元官网网址� moment,B次元官网网址� said Hamilton, a former lawyer for movie studios. B次元官网网址淭hey were able to be headstrong and play the role as a disruptor for a long time. But now the honeymoon is over and they have to face the reality of business.B次元官网网址�
Hamilton believes offering a lower priced version of NetflixB次元官网网址檚 service that includes ads will be warmly received by consumers looking to save money, as long as subscribers willing to pay more can still binge watch without commercial interruption.
The crackdown on password sharing could be more problematic, though.
B次元官网网址淚 think we may be at the point of no return for password sharing,,B次元官网网址� said Ben Treanor, a digital marketing strategist for Time2Play, a gaming site that recently studied the B次元官网网址渟treaming swindlersB次元官网网址� phenomenon. B次元官网网址淚 think thereB次元官网网址檚 a chance if you throw someone off their familyB次元官网网址檚 account, they may not pick up their own account.
Netflix has survived customer backlash before. Back in 2011, it unveiled plans to begin charging for its then-nascent streaming service, which had been bundled for free with its traditional DVD-by-mail service. In the months after that change, Netflix lost 800,000 subscribers, prompting an apology from Hastings for botching the execution of the spin-off. But the company bounced back.
Ads, meanwhile, have never been a favorite of Hastings, who has long viewed them as a distraction from the entertainment Netflix provides.
Ravin Ramjit, a 41-year-old living in London, will have none of them.
B次元官网网址淚 specifically signed up for Netflix back in the day because there were no ads,B次元官网网址� he said. B次元官网网址淎ds are too intrusive and they break your concentration and the continuity of the shows. You might be in a nice, intense scene B次元官网网址� youB次元官网网址檙e really into it B次元官网网址� and all of a sudden they cut to commercial.B次元官网网址�
Stalwarts like David Lewis in Norwalk, Connecticut, say the changes donB次元官网网址檛 seem like a big deal. Lewis shares a premium plan with his three adult children and some of their friends and says they will keep it, even if they have to cut off the friends and each pay for their own accounts.
B次元官网网址淲e would keep Netflix and pay for the four in our family, even if it was more,B次元官网网址� he said. B次元官网网址淲e love the service and what it offers.B次元官网网址�
Netflix began heading in a new direction last year when at no additional charge in an attempt to give people another reason to subscribe.
B次元官网网址擬ichael Liedtke And Mae Anderson, The Associated Press
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