Netflix has been having a rough 2022. Back in Q1 2022, the video-streaming service announced that it had lost 200K paying customers. The number was a big blow for the company, and it was forced to make some changes to make the product more appealing to customers.
Now, the new numbers are here, and it has been reported that the platform lost nearly 1 million subscribers (970K). It had been projected that the platform would lose 2 million subscriptions, but that was not the case.
The changes that the company wants to introduce include launching a free-tier plan that is supported by ads. The product has already been launched in Kenya and will be rolled out worldwide in 2023.
Netflix is also planning to increase plan prices for accounts that share passwords. It has already started doing the same thing in select Latin American countries. This, according to the corporation, will see it discourage password sharing. Incidentally, more than 100 million households use Netflix for free thanks to password sharing.
While the loss of 1 million customers is a big deal, Netflix actually managed to boost its revenues by 8.6 percent thanks to a jump in the average paid membership.
Still, Netflix expects to regain the lost subscriptions in the next quarter if the economy grows. The challenges associated with the pandemic have hit households hard, which is partly why some of them have been forced to let go of services they can live without. The foreign currency impact has also not been favourable across the board.
The ad-supported plan will be launched in partnership with Microsoft. We will wait and see how this goes, and whether the company will be able to clamp down on the said 100 million households that do not pay for the service, and supplement its existing customer base of 200 million paid accounts.