How does Netflix plan to recover after losing subscribers?
1:03
New York (CNN Business) --
Netflix recently told employees that a new, lower-priced subscription tier, with ads, could arrive later this year, according to a report by
The New York Times
on Tuesday.
The company has faced difficulties as competition in streaming services grows: Shares plunged last month after Netflix reported its first quarterly subscriber loss in more than a decade.
Netflix CEO Reed Hastings said in April that the company was open to adding ads to the service, shocking the media and advertising industry.
Hastings refused for years to put ads on the platform.
To save itself, Netflix might have to play nice with an industry that struggled for years
"Those who have followed Netflix know that I've been against the complexity of advertising and I'm a big fan of the simplicity of subscription. But as much as I'm a fan of that, I'm more of a fan of consumer choice." Hastings said on last month's post-earnings call.
"And allowing consumers who like a lower price, and are tolerant of advertising, to get what they want makes a lot of sense."
Hastings added in April that Netflix was trying to figure out how to bring the ads to the platform "over the next year or two."
But that process appears to be accelerating.
Netflix, which declined to comment for this report, is trying to find a way to bring in more money, stem the losses on Wall Street and reverse the narrative about its actions.
However, the news spooked investors, causing Netflix shares to drop 1% following the report.
Stocks had risen before the
New York Times article was
published .
Another area of revenue generation that Netflix has been exploring is the possibility of cracking down on password sharing among its subscribers.
The note to employees also says that Netflix will start working on the password issue at the same time it wants to debut the ad-supported subscription option.
In March, the company said it has been working for a year on ways to "allow members who share their password outside of their home to do so easily and securely, while also paying a little more."
Netflix can clamp down on sharing accounts and passwords.
What does this mean?
Netflix reported in April that it has 221 million subscribers, making it the leader in the streaming market, but that it lost 200,000 users in the first quarter of 2022. As if that were not enough, it said it expects to lose another two million in the second. trimester.
The loss of subscribers and poor forecasts have raised questions from investors about the future growth of Netflix and even the entire streaming business.
Netflix
