ENTERTAINMENT

Netflix aims to curtail password sharing, considers ads

Apr 20, 2022, 8:21 AM
Netflix subscribers...
FILE - This Aug. 13, 2020, photo shows a logo for Netflix on a remote control in Portland, Ore. Photo: AP, Jenny Kane.

SAN FRANCISCO (AP) — An unexpectedly sharp drop in subscribers has Netflix considering changes it has long resisted: Minimizing password sharing and creating a low-cost subscription supported by advertising.

Looming changes announced late Tuesday are designed to help Netflix regain momentum lost over the past year. Pandemic-driven lockdowns that drove binge-watching have lifted, while deep-pocketed rivals such as Apple and Walt Disney have begun to chip away at its vast audience with their own streaming services.

Utah news:  Semi rollover on I-80 in Summit County closes freeway in both directions

Netflix’s customer base fell by 200,000 subscribers during the January-March quarter, the first contraction the streaming service has seen since it became available throughout most of the world other than China six years ago. The drop stemmed in part from Netflix’s decision to withdraw from Russia to protest the war against Ukraine, resulting in a loss of 700,000 subscribers. Netflix projected a loss of another 2 million subscribers in the current April-June quarter.

The erosion, coming off a year of progressively slower growth, has rattled Netflix investors. Shares plunged by more than 25% in extended trading after Netflix revealed its disappointing performance. If the stock drop extends into Wednesday’s regular trading session, Netflix shares will have lost more than half of their value so far this year — wiping out about $150 billion in shareholder wealth in less than four months.

The Los Gatos, California, company estimated that about 100 million households worldwide are watching its service for free by using the account of a friend or another family member, including 30 million in the U.S. and Canada.

“Those are over 100 million households already are choosing to view Netflix,” Netflix CEO Reed Hastings said. “We’ve just got to get paid at some degree for them.”

To prod more people to pay for their own accounts, Netflix indicated it will expand a trial program it has been running in three Latin American countries — Chile, Costa Rica and Peru. In these locations, subscribers can extend service to another household for a discounted price. In Costa Rica, for instance, Netflix plan prices range from $9 to $15 a month, but subscribers can openly share their service with another household for $3.

Netflix offered no additional information about how a cheaper ad-supported service tier would work or how much it would cost. Another rival, Hulu, has long offered an ad-supported tier.

While Netflix clearly believes these changes will help it build upon its current 221.6 million worldwide subscribers, the moves also risk alienating customers to the point they cancel.

Netflix was previously stung by a customer backlash in 2011 when it unveiled plans to begin charging for its then-nascent streaming service, which had been bundled for free with its traditional DVD-by-mail service before its international expansion. In the months after that change, Netflix lost 800,000 subscribers, prompting an apology from Hastings for botching the execution of the spin-off.

Tuesday’s announcement was a sobering comedown for a company that was buoyed two years ago when millions of consumers corralled at home were desperately seeking diversions — a void Netflix was happy to fill. Netflix added 36 million subscribers during 2020, by far the largest annual growth since its video streaming service’s debut in 2007.

But Hastings now believes those outsized gains may have blinded management. “COVID created a lot of noise on how to read the situation,” he said in a video conference Tuesday.

Netflix began heading in a new direction last year when its service added video games at no additional charge in an attempt to give people another reason to subscribe.

Escalating inflation over the past year has also squeezed household budgets, leading more consumers to rein in their spending on discretionary items. Despite that pressure, Netflix recently raised prices in the U.S., where it has its greatest household penetration — and where it’s had the most trouble finding more subscribers.

In the most recent quarter, Netflix lost 640,000 subscribers in the U.S. and Canada, prompting management to point out that most of its future growth will come in international markets. Netflix ended March with 74.6 million subscribers in the U.S. and Canada.

Entertainment

...
Mark Jones

Soap box derby set for Saturday in Daybreak

Daybreak will host the second annual Soap Box Derby on Saturday from noon to 3 p.m.
27 days ago
Nicolas Cage as “Nick Cage” contemplates his career in Mallorca, Spain in “The Unbearable Wei...
KellieAnn Halvorsen

FAN EFFECT REVIEW: “The Unbearable Weight of Massive Talent” is a hilarious grown-up comedy with an emphasis on grown-up

“The Unbearable Weight of Massive Talent” is a wonderfully weird, insightfully intelligent, and absolutely hilarious grown-up action-comedy. 
27 days ago
Garth Brooks Salt Lake...
Simone Seikaly

Garth Brooks sells out second Salt Lake concert in 45 minutes

It was the second time in less than a year that Garth Brooks sold that many tickets for a Salt Lake City concert so quickly.
27 days ago
FILE - Alec Baldwin performs emcees the Robert F. Kennedy Human Rights Ripple of Hope Award Gala at...
MORGAN LEE Associated Press

New Mexico fines ‘Rust’ for willful gun safety failures

Inspectors say Rust production managers took limited or no action to address two rifle misfires of blank rounds on set prior to the fatal shooting.
29 days ago
Sistine chapel exhibition...
Samantha Herrera

Sistine Chapel exhibition coming to Salt Lake

Ceiling frescos from the Sistine Chapel are reproduced and presented in a viewer-friendly way in this exhibition
1 month ago
garth brooks salt lake city concert...
Chandler Holt

Promise kept — Garth Brooks returning to Utah in June, 2022

Garth Brooks will be making a return to Utah to perform at Rice-Eccles Stadium. The concert will be held on June 18 at 7:00 p.m.
1 month ago

Sponsored Articles

Prescription opioid...
Know Your Script

Prescription opioid misuse | How to protect your family from the opioid epidemic

Studies have shown that prescription opioid misuse has increased since COVID-19. So what do you need to know about these opioids?
...

Tax Tuesday: The Most Common Mistakes People Make When Filing Their Taxes

Fortunately, for most average earners, they will not end up owing overpayments received for the Child Tax Credit in 2021.
...

Tax Tuesday: How will last year’s child tax credits affect you?

Fortunately, for most average earners, they will not end up owing overpayments received for the Child Tax Credit in 2021.
...

Tax Tuesday: Key Information Before the Filing Deadline

Businesses can receive a credit of up to $5,000 per employee in 2020 and up to $21,000 per employee in 2021.
national heart month...
Intermountain Healthcare

National Heart Month: 5 Lifestyle Changes to Make Today to Keep You Heart Healthy

Heart disease is the leading cause of death for both men and women. One person dies every 36 seconds in the United States from cardiovascular disease
Joseph Smith Memorial Building...
Temple Square

The Joseph Smith Memorial Building is an icon of Salt Lake City | Why hosting an event at this beautiful location will make you a hero this year

Here's why hosting an event at the iconic Joseph Smith Memorial Building in downtown Salt Lake City will make you a hero this year.
Netflix aims to curtail password sharing, considers ads