Netflix entering death spiral
Posted: Sat Apr 23, 2022 5:55 pm
As shares plunge, Netflix takes aim at password sharing, ads
The sudden sweeping fall of Netflix took me by surprise. If this keeps up, Blockbuster (which still has a single store open) might actually wind up outlasting Netflix after all.An unexpected drop in subscribers sent Netflix shares into freefall Wednesday, forcing the company to consider experimenting with ads and -- hold onto your remote -- cracking down on millions of freeloaders who use passwords shared by friends or family.
The surprising net loss of 200,000 subscribers rattled investors, who had been told by the company to expect a gain of 2.5 million subscribers. Netflix shares sank 35% on the news, falling to their lowest level since early 2018.
Netflix estimates that about 100 million households worldwide — or roughly one out of every three households using its service — are streaming for free. “We’ve just got to get paid at some degree for them,” co-CEO Reed Hastings said during a shareholder call Tuesday.
Netflix has already been experimenting in Latin America with programs that use a soft touch to convince the unsubscribed to sign up. In Costa Rica, for instance, Netflix plan prices range from $9 to $15 a month, but subscribers can create sub-accounts for two other individuals outside their household for $3 a month. On Tuesday, Hastings suggested that the company may adopt something similar in other markets.