Netflix’s ad-supported plans and password-sharing crackdown will arrive before the end of 2022: report

Netflix is ​​looking to introduce ads to its platform and will begin cracking down on password sharing before the end of 2022, according to a new report, citing Access to an internal memo. That’s much faster than what Netflix founder and co-CEO Reed Hastings released just a month ago during the last quarterly earnings call. At the time, Hastings said the world’s largest subscription video streaming service would offer advertising alternatives to existing plans over the “next year or two.” And on that same call, Netflix COO Greg Peters said Netflix would “spend about a year iterating” on password sharing before rolling out a plan. But it could happen sooner now.

Two people who had access to Netflix’s internal memo shared it with The New York Times, which reveals that Netflix executives are aiming to launch the ad-supported tier between October and December 2022. It’s unclear at this point. how Netflix’s foray into ads will work. , since it is one of the only ones in the world – between Disney+, HBO Max, Amazon Prime Video, Apple TV+, Hulu, Peacock and Paramount+ – to offer several plans that differ in video quality and the number of simultaneous screens , not by content. Will there be an ad-supported version of Netflix’s Mobile, Basic, Standard, and Premium plans? This seems likely, as it would allow Netflix to broadly target customers.

In the memo seen by the NYT, Netflix executives noted how their U.S. competitors have been able to “maintain strong brands while delivering an ad-supported service.” Hulu, Peacock, Paramount+, and HBO Max all offer ad-supported tiers in the US at a lower cost than ad-free plans. Disney+ is set to introduce its own ad-supported tier in late 2022. In India, Disney+ Hotstar, Voot, Zee5, Eros Now, and SonyLIV already have ad-supported tiers. Netflix acknowledged the situation in the United States in its memo: “Every major streaming company except Apple has or has announced an ad-supported service. For good reason, people want cheaper options.

Netflix’s plans to crack down on password sharing will also begin around the last three months of 2022, according to the internal memo seen by the NYT. Peters previously revealed that they were “not trying to shut down the (password) sharing, but we’re going to ask you to pay a little extra to be able to share.” For those wondering how that might work, Netflix has been testing since March the ability for subscribers to pay to share their accounts outside their homes in Chile, Costa Rica and Peru. This allows Netflix members to add “sub-accounts” for up to two people who don’t live with them, at a lower price. Alongside this, Netflix has also introduced profile transfers in these regions, allowing moochers to take their watchlist, viewing history, and personalized recommendations to a new account or profile.

The acceleration of both – the ad-supported plans and the crackdown on password sharing – hints at Netflix’s desperation to turn the tide. In April, the streaming service reported its first subscriber loss in a decade, which had a profound impact on its share price and, therefore, valuation, as well as industry perception. video streaming as a whole. In its latest quarterly earnings call, Netflix said it estimates more than 100 million households are using its offerings but not paying for it. At the end of March, Netflix had more than 221.6 million subscribers, although it expects to lose 2 million more by the end of this quarter. With lower-priced tiers rolling out faster than expected and the ability to add more accounts to existing profiles, Netflix hopes to add millions more in 2023.

“Yes, it’s fast and ambitious and it will require trade-offs,” Netflix executives said in the memo. But will it be enough?

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