Netflix to roll out ad-supported, cheaper subscription plans; loses 2 lakh subscribers in Q1 of 2022

Netflix has announced that it will be rolling out cheaper, ad-supported tiers to consumers over the period of two years. The move has come on the back of stiffer competition from rival firms and part of its strategy to boost its subscriber base.

Reed Hastings, CEO, said, “We don’t have any doubt that ads works. The ad model has matured enough and proven successful for rivals such as Hulu and Disney. Those who have followed Netflix know that I’ve been against the complexity of advertising, and am a big fan of the simplicity of subscription. But, as much as I’m a fan of that, I’m a bigger fan of consumer choice.”

This is for the first time in Netflix’s history that the platform will be making such a major shift in the way it monetises. 

In the past few years, Netflix was time and again questioned if it would be introducing ads on the platform. It had always maintained that it had no plans to launch ads, but given the circumstances, the OTT giant has to resort to advertising. 

The firm reported a loss of 200,000 subscribers in the first quarter of 2022, said Hastings during the earnings call. He further said that the OTT platform is expected to lose another two million in the current second quarter.  

Netflix said that this loss of two lakh subscribers doesn’t include the subscriber base from Russia, where the platform has stopped streaming amid the Ukraine-Russia war. Otherwise, the subscribers' loss would have crossed 7,00,000.

Netflix's revenue, meanwhile, grew by 10% to $7.86 billion versus $7.16 billion YoY.

This is for the first time in 10 years that Netflix has lost such a huge number of subscribers in a single quarter. At the end of December 2021, Netflix reported it had 221.84 million subscribers, which fell to 221.64 million subscribers between January-March 2022.

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