Netflix’s Subscription Troubles
On April 21, Netflix announced that it had lost 200,000 subscribers since the beginning of 2022. This rapid decrease of subscribers began in March after they suspended their service in Russia to protest its invasion of Ukraine. Later, Netflix stated that they would join other streaming companies such as Hulu, Home Box Office (HBO) Max and Disney+ by halting all future projects and acquisitions in Russia. They had four Russian originals in the works, including a crime thriller series by Dasha Zhuk, which was shooting but has now been put on hold (Variety News). Suspending services in Russia could potentially lead to an overall decrease in viewership along with a decrease in revenue. Sophomore Natasha Kohli agrees with the company’s decision to suspend their services in Russia.
“I see banning Netflix in Russia as globally beneficial because it protests [Russia’s] full-scale invasion of Ukraine,” Kohli said. “Action needs to be taken to protest [Russia’s invasion] in [both] small and large scales. Netflix suspending themselves in Russia brings us closer to combatting the Russia-Ukraine conflict.”
Another factor contributing to the drop in subscriptions is that around 100 million households watch Netflix for free using other people’s accounts by sharing passwords. The company confirmed in January that they will soon require people to pay if they choose to share their password with people outside of the original account subscription. (Personal Computer Magazine). Netflix signaled that they would do this by first alerting account holders whose passwords are being used by other households. Next, they would require subscribers to pay an extra $3 per month to allow someone else outside their household to access their account. This Add an Extra Member feature is currently being tested out in other countries like Peru, Costa Rica and Chile. People who currently use a shared password will be allowed to transfer their personalized information to either a new account or a sub-account, a separate account created through the Add an Extra Member feature, letting them keep their viewing history and recommendations (Consumer News and Business Channel). Sophomore Sofia Deek thinks the measures Netflix is taking are insensitive towards people who cannot afford their own Netflix subscription, and ineffective for the company long term.
“I think the Add a Member Feature is disadvantageous for the account holder because they would have to pay extra money for the [person] who is borrowing their account, which seems counterintuitive,” Deek said. “ I think Netflix should not be notifying people who share passwords and ask for money from them. I have shared my Netflix password with my friends and it is mutually beneficial for all of us.”
Another way Netflix plans to combat the loss of subscribers is by offering a cheaper, ad-supported subscription, since giving consumers who would like to have a lower subscription price and tolerate the advertisements another option could be helpful. This installment is most likely to occur in one or two years without the use of data-tracking and ad-matching according to Hastings. As of now, the company’s Standard Plan is $15.49 per month, so an ad-supported plan would most likely be around $8. Netflix also has a Basic Plan, which does not provide high-definition streaming and is $9.99 per month, so an ad-supported plan for this could possibly be around $5 (Personal Computer Magazine). Sophomore Brindha Srivatsav believes that Netflix offering an ad-supported plan has both beneficial and disadvantageous aspects.
“An ad-supported plan is a good idea on [Netflix’s] part because it is good marketing and it gives people with lower incomes easier accessibility to Netflix,” Srivatsav said. “However, if a company is potentially offering a $5 plan, then it cannot be good quality. So, once people sign up for the plan, they might cancel their subscriptions due to how poor [the quality] is. At that point, [Netflix] will end up back where they started.”
