Impact of Decrease in Paid Members of Our Company
[Asia Economy Reporter Na Ye-eun] Netflix, the world's largest video streaming company, whose stock price recently plummeted sharply, is reportedly planning to introduce a low-cost service with ads within this year.
The New York Times (NYT) reported this on the 10th (local time), citing an internal memo Netflix recently sent to its employees.
According to the memo, Netflix has set the introduction of the ad-supported low-cost service for the fourth quarter of this year and plans to crack down on password sharing of paid membership accounts around the same time.
This is an urgent measure prepared by Netflix, which saw a decline in subscribers for the first time in 11 years, to maintain and expand its customer and revenue base.
NYT stated, "CEO Reed Hastings said during the first-quarter earnings announcement last month that they would consider introducing an ad-supported service within the next 1 to 2 years, but it seems the schedule has been moved up."
Netflix had previously refused to launch an ad-supported service, citing content quality differentiation. However, as its paid subscribers decreased and competitors like HBO Max and Hulu introduced ad-based plans, it changed its policy.
In the internal memo, Netflix wrote, "HBO and Hulu have been able to maintain strong brands while offering ad-supported services, and major streaming companies except Apple have decided to introduce ad-supported services. People want low-cost options."
Along with this, Netflix's crackdown on account sharing is expected to be carried out by charging additional fees.
Netflix estimates that over 100 million households worldwide access content by sharing other paid members' accounts, including 30 million households in the U.S. and Canada alone.
Meanwhile, on the 20th of last month (local time), Netflix's stock plunged 35.1% on the New York Stock Exchange after recording a subscriber decline for the first time in 11 years.
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