A dramatic decrease in subscribers drove Netflix shares falling on Wednesday, leading the firm to consider experimenting with advertisements and clamping down on millions of freeloaders who use credentials provided by friends or family members to get access to its services.
The upcoming adjustments are intended to assist Netflix in regaining the momentum it has lost over the previous year, though, competitors like Apple and Walt Disney have started to eat away at Netflix’s massive viewership with their own streaming services.
Netflix’s client base fell by 200,000 members over the three-month period from January to March, marking the first time the streaming service has witnessed a decline since it became accessible in much of the globe other than China six years ago and expects to lose another 2 million customers in the current quarter, which runs from April to June.
This precipitous decline, which comes after a year of steadily decreasing growth, has caused significant concern among Netflix investors as the shares of the firm had fallen as much as 37 percent.
It will be some time before we know how this will affect existing Netflix subscribers, as, according to specialists, around 100 million homes across the globe are utilizing a friend or another family member’s account to watch its service for free, with 30 million of those households in the United States and Canada.
While Netflix plainly feels that these modifications would aid in the growth of its existing 221.6 million global users, the adjustments also run the danger of upsetting consumers to the point where they decide to cancel their subscription.
A new route was charted for Netflix last year when the company announced that it will be offering video games at no extra cost in an effort to give users another incentive to subscribe.
Inflation has been rising steadily over the last year, putting pressure on family budgets and prompting more people to cut down on their spending on discretionary products. Although under pressure, Netflix recently increased its fees in the United States, where it has the largest household penetration – and where it has the most difficulty attracting new users.
Netflix has announced that it would extend a trial program that it has been doing in three Latin American countries — Chile, Costa Rica, and Peru — to encourage more people to pay for their own accounts: subscribers in these areas have the option of extending their subscription to another home at a discounted rate.