The news: Netflix shed 200,000 subscribers in Q1, marking the streaming leader’s first subscriber loss in more than a decade and prompting the company to accept advertising and crack down on password sharing in an attempt to keep growing.
More on this: What caused Netflix’s subscription reversal? CEO Reed Hastings cited password sharing (which could net $1.6 billion according to experts) and the crowded streaming market as potential culprits. But he also warned that its solutions like stemming password sharing and adding an ad-supported channel could take years to implement.
Netflix’s advertising reversal: Hastings had long made the argument that the lack of advertising is what made Netflix a more distinct, better service than its competitors. But with HBO Max, Disney+, Peacock, and others adding or entertaining ad-supported channels, it’s become easier for Netflix to make the jump and extend an olive branch to investors worried about subscription slowdowns.
Password problems persist: Hastings warned that a password crackdown on the estimated 100 million users watching Netflix for free is on the way within the next year, but there’s no guarantee that those users will convert to paid subscriptions, even if a cheaper AVOD option is added.
The big takeaway: Netflix is the last major domino to fall in streaming’s pivot away from the longstanding subscription-only model toward accepting advertising, and there’s no going back.
Editor’s note: Our Connectivity & Tech Briefing also covered this story; here’s their take.