Netflix’s ad-supported tier, password-sharing crackdown may come by end of 2022: report

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Big changes may be coming to Netflix Inc. a lot sooner than expected.

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The New York Times reported Tuesday that the streaming giant hopes to launch a lower-priced, ad-supported tier and crack down on password sharing sometime in the last quarter of 2022.

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Last month, Netflix Co-Chief Executive Reed Hastings said such moves were being considered, but suggested they would happen over the next year or two.

But the Times report, citing two sources who saw details in an internal Netflix communication, said those plans are being sped up as the streaming service expects to bleed subscribers.

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After losing 200,000 subscribers in the first quarter — the first significant loss of subscribers since Netflix’s early years — the company said in its earnings report in April it expects to lose 2 million customers in the current quarter. That news sent Netflix shares NFLX,
+2.63%
tumbling; the stock is down almost 50% in the past month, and has plunged more than 70% year to date.

Also Here’s the case for buying Netflix’s stock now

While Netflix for years had dismissed the possibility of offering a tier with commercials, Hastings said in last month’s earnings video that times had changed, citing successful ad-supported tiers by Netflix’s rivals. “It’s pretty clear that it’s working for Hulu, Disney’s doing it, HBO did it. I don’t think we have a lot of doubt that it works,” he said. “I’m sure we’ll just get in and figure it out.”

The issue of password-sharing, meanwhile, was ignored or even encouraged for years by Netflix. But executives said in their earnings letter than an estimated 100 million viewers piggyback for free on someone else’s account outside their household. Converting a portion of those into paying subscribers could significantly grow its paid-user base of 222 million worldwide.

Is Netflix cracking down on password sharing? Here’s what you need to know if you share an account

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Credit: www.marketwatch.com /

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