Netflix stock drops 37% as CEO says company plans ad-supported layer

Netflix CEO Reed Hastings said Tuesday that Netflix plans to launch a lower-priced subscription class with ads. Interview to discuss first quarter earnings. Netflix’s revenue growth slows amid a loss in subscribers, and the company’s stock price is down nearly 37 percent Wednesday as of this writing.

Hastings said the ad-supported level is something “we’re trying to figure out over the next year or two” and that Netflix is ​​”absolutely open to offering lower prices with advertising as a consumer option.”

“Those who follow Netflix know I’ve been against the complexity of ads and love the simplicity of subscribing,” Hastings said. “But as much as I like that, I’m a huge fan of consumer choice, and letting consumers who want a lower price and who are tolerant of advertising get what they want makes a lot of sense.”

When asked if Netflix would test an ad-supported plan in smaller markets before going global, Hastings suggested he didn’t think that would be necessary. “No, I think it’s very clear that it works for Hulu. Disney does it; HBO has done it. I don’t think we have much doubt that it works. You know all these companies have figured it out. I’m sure we We’ll go in and find out instead of testing it and we may or may not do it.”

When Netflix adopts ads, “it’s a plan tier as it is on Hulu, so if you still want the ad-free option, you’ll be able to have it as a consumer. And if you’d rather pay a lower price and you’re ad-tolerant, we’ll cater to your needs too,” Hastings said. .Netflix the prices In the US it currently ranges from $9.99 to $19.99 per month.

Netflix also fights password sharing

Netflix said last month that it would fight password sharing with its Charging an additional fee of about $3 For users who share their accounts with people in other households, with fees rolled out first in Chile, Costa Rica and Peru.

“[I]n In addition to 222 million paid families, we estimate that Netflix is ​​shared with over 100 million additional families, including over 30 million in the UCAN region [US and Canada],” Netflix said in a file Message to shareholders Tuesday. The letter states that Netflix plans to “make more efficient income from sharing between multiple families.”

Netflix said that “account sharing as a percentage of our paid membership hasn’t changed much over the years,” but it has become a bigger focus for the company as it struggles to grow its subscriber base. Hastings discussed plans to address account sharing without providing many details:

We are working on how to monetize the post. We’ve been thinking about it for a few years, but when we were growing fast, working on it wasn’t a top priority, and now we’re working really hard on it. Remember, that’s over 100 million families already choosing the Netflix show. They love the service. We just have to get paid to some degree.