Netflix’ Hastings Mulls Offering Lower Priced Tier As Sub Count Drops
Neflix CEO Reed Hastings made some interesting disclosures Tuesday in the company’s Q1 financial reporting, including a loss of 200,000 net subscribers, addressed by some moves to support profitability.
With the Q1 subscriber drop-off, the company said its current worldwide subscriber count now stands at 221.6 million — still the world’s largest premium subscription streaming service, But the service is projected a further loss of 2 million net subs for the current quarter.
Netflix attributed the subscriber losses to both a higher level of cancellations and to losing 700,000 Russian subscribers, after the service discontinued operations there following the crisis in Ukraine.
Other factors include fewer sales of Smart TVs and streaming devices resulting from components shortages and continued problems with shipping logistics, password sharing, increased competition, and tough economic conditions.
In the first quarter, the service also recently raised its prices in the U.S.and the U.K. Fee hikes will be passed along to other regions in Q2.
One of the moves Hastings said Netflix is considering to bolster subscriber retention (or even expand the base) is implementing a cheaper partial ad-supported subscription tier, and the other involves a crackdown on subscription sharing.
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In his Q1 update call, Hastings said he would be open to possibly adding a lower-priced, partial AVOD subscription tier as a consumer option. Hastings said he supports giving customers more plan choices even above the simplicity of the subscription-only model the company has used to date. He added that if appropriate, the new tier could be added in the next year or two, but gave no further details.
If it happens, Netflix would join the ranks of other premium services that have gone with ad-supplemented Subscription Video On Demand (SVOD) options, including some key rivals like HBO Max, Disney+, Paramount+, Peacock and others, some of which have been gaining market share ground on the streaming giant.
Meanwhile, the company said it is taking steps to address its estimated 100 million non-paying members accessing the platform by cracking down on password sharing.
As previously announced, the company recently began testing new methods to counter the practice in three countries.
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By Greg Tarr
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