The corporation announced losing 700,000 users as a result of shutting down its service in Russia, despite having gained millions of subscribers during Covid lockdowns. It also cited consumers who shared their Netflix password with others as a cause of the rivalry from rivals. The leading company in streaming states that the service will be an “addition” to its existing subscription, which are free of advertisements.
How much the business intends to charge customers for the new service is still a secret.
After reporting its first subscriber decline in over ten years and making hundreds of job cuts earlier this year, Netflix made the announcement.
Between January and March, it lost 200,000 users as opposed to the 2.5 million analysts had predicted the company would gain during that time. Additionally, Netflix now anticipates losing an additional two million subscriber between April and June.
The business announced that it had chosen Microsoft as its exclusive global sales and advertising technology partner to launch a “cheaper price ad-supported membership plan.”
In a statement, Netflix’s chief operating officer Greg Peters stated, “It’s really early, and we have a lot to work through.
“Microsoft does have the verified capacity to serve all business marketing demands as we work together to establish a new ad-supported product,” said Greg Peters, COO of Netflix.
Netflix’s unexpected decision to finally join competitors like HBO Max, Hulu, and Paramount+ by introducing an ad-supported package for the year is anticipated to come before the announcement next week that the company lost an additional 2 million subscribers globally in the 3 months leading up to the end of June.
It’s still extremely early, and there are many issues to resolve, according to Peters. But our long-term objective is obvious. Consumers have more options, and advertisers enjoy a superior, non-linear television brand experience.
Netflix has consistently opposed adding advertising for years, despite the fact that plans with both a cheaper price element and ad revenue are frequently more profitable than a more expensive ad-free subscription. Reed Hastings, a co-founder of the business, claimed they will “exploit” and alter the viewing experience.
Netflix has never desired advertisements. The foundation of its entire business strategy was a monthly subscription.
However, Netflix officials were forced to disregard their own policies.
It follows horrendous data that revealed the corporation was losing subscribers.
Additionally, as a result of the high cost of living, households have had to tighten their budgets and have begun to consider their Netflix subscription as a potential saving. Investors have become uneasy.
In addition, Netflix faces stiff competition from services like Apple TV, Disney+, HBO Max, and Amazon Prime.
There aren’t enough paying subscribers to go around, and there are too many possibilities.
In order to react, Netflix is developing a less expensive version that will include advertisements and will launch later this year.
A similar business strategy is used by Spotify, which offers free music in exchange for watching ads.
It is hoped that by accepting commercials, Netflix can attract more customers.
However, the decision also demonstrates that advertisements, which were considered by high-end streaming firms to be so passé just a few years ago, are still very much alive and well.
The Report Stated on Tuesday that Netflix is trying to restructure its contracts with significant entertainment companies so that it can include advertisements in its service.
As per reports, the firm has talked with Sony Pictures Television, Universal, and Warner Bros.
Warner Bros. opted not to respond. A BBC request for comment was not immediately answered by Universal or Sony.
Netflix’s market value dropped by $50 billion in April after the firm revealed the unexpected decline in subscribers, just since October 2011.
The business reported losing 700,000 users as a result of shutting down its service in Russia, despite having gained millions of subscribers during Covid lockdowns. It also cited consumers who shared their Netflix password with others as a cause of the rivalry from rivals.
The business announced 300 job losses last month as it struggled with the decline in consumer volume.
Also in the past month, Netflix’s co-CEO Ted Sarandos stated that the company was in discussions with several businesses to identify ways to appeal to price-conscious customers.
“Netflix as it currently exists won’t get any more advertisements. For those who say, “Hey, I want a lower price and I’ll watch advertisements,” we are adding an ad tier “At a conference in Cannes, Mr. Sarandos informed the audience.
However, there hasn’t been any formal announcement of the launch date for these more affordable options. Alongside the current alternatives, a new ad-enabled subscription plan will be available that will give users inexpensive access to premium content. According to the business, there is still a lot of work to be done and the new move is still in its very early phases.