Netflix shares plummet 37% as CEO says company plans ad-supported ratings

Netflix CEO Reed Hastings is sitting on stage at a conference.
Enlarge / Netflix CEO Reed Hastings at the Milken Institute Global Conference in Beverly Hills, California, on October 18, 2021.

Getty Images | Bloomberg

Netflix plans to roll out a lower-priced subscription tier with ads, CEO Reed Hastings said Tuesday in a press release. Interview to discuss first quarter earnings. Netflix revenue growth is slowing amid a drop in subscribers, and the company’s stock price has fallen about 37% on Wednesday as of this writing.

Hastings says that the ad-supported tier is something “we’re trying to figure out over the next year or two,” and Netflix is ​​”quite open to offering even lower prices with ads as an option.” consumers.”

Hastings says: “Anyone who has been following Netflix knows that I have resisted the complexity of advertising and am a huge fan of the simplicity of subscriptions. “But I’m a fan of that, I’m more of a fan of consumer choice and allowing consumers who want lower prices and accepting ads to get what they want. want means a lot.”

When asked if Netflix would test the ad-supported plan in small markets before rolling it out globally, Hastings said he doesn’t think it’s necessary. “No, I think it’s pretty obvious it’s working for Hulu. Disney is doing it; HBO has done it. I don’t think we have much doubt that it’s working. You know that all the that company figured it out. I” I’m sure we’ll just point in and figure it out instead of testing it and may or may not do it. “

When Netflix adopts ads, “it will be a plan layer like it is in Hulu, so if you still want the ad-free option, you’ll be able to have that option as a consumer. And If you want to pay a lower price and you are tolerant of advertising, we will also serve you,” Hastings said. Netflix price in the US currently ranges from $9.99 to $19.99 a month.

Updated at 4:30 p.m. ET: Netflix stock was down 35.12% at market close today.

Netflix is ​​also against sharing passwords

Netflix last month said it would fight password sharing by extra charge around $3 for users who share an account with people in other households, with fees applied first in Chile, Costa Rica and Peru.

“[I]In addition to our 222 million paying households, we estimate that Netflix is ​​being shared with over 100 million other households, including over 30 million people in the UCAN region [US and Canada]”, Netflix said in letter to shareholders Tuesday. The letter states that Netflix is ​​planning to “more efficiently monetize multi-household sharing.”

Netflix says “our paid membership percentage-sharing hasn’t changed much over the years,” but it’s becoming a bigger focus for the company as it struggles to keep up. grow your subscriber base. Hastings discussed plans to address the account sharing issue without providing many details:

We are working on how to monetize sharing. We’ve been thinking about it for a couple of years, but when we go fast, it’s not a high priority to work and now we’re working extremely hard. Remember, these are over 100 million households that have chosen to watch Netflix. They love the service; we just have to be paid to some extent for them.

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