Netflix already has a plan for the loss of 200,000 users

It was clear that Netflix would not sit idly by after it reported the loss of 200,000 users in the first quarter of 2022.

As part of its strategy to counter the worrying situation, the video streaming platform confirmed that it will launch a cheaper subscription. Of course, with ads to compensate for the price drop.

It was Netflix co-CEO Reed Hastings who announced such an important move during the usual call with investors (information thanks to The Hollywood Reporter).

However, users should not wait to see the cheap subscription anytime soon, as the company will spend at least a year studying the offer before implementing it for everyone. The director does not rule out that the course lasts two years.

The loss of 200,000 users, the reason for the change of mind

Recently, in March, Spencer Neumann, Netflix's chief financial officer, said they weren't interested in an ad-supported subscription. “That's not in our plans right now. We have a great subscription business model on a global scale,” he said.

What made you change your mind in such a short time? Undoubtedly the disappointing figures reported in the first fiscal quarter of 2022.

Speaking to investors, Hastings himself acknowledged that consumers want a cheaper alternative. It should be remembered that the platform has been steadily increasing its prices in much of the world, a situation that is beginning to bother a significant number of members. However, now Netflix wants to turn things around:

“Those who have followed Netflix know that I've been against the complexity of advertising and I'm a big fan of the simplicity of the subscription. But as much as I'm a fan of it, I'm more of a fan of consumer choice. And allowing users who would like to have a lower price and tolerate advertising to get what they want, makes perfect sense,” the platform said in an official statement.

Netflix, with a close eye on its competition not to be left behind

Another factor that has encouraged Netflix to explore an ad-supported plan is the excellent acceptance of this type of subscription by its competitors. HBO Max is already offering a free ad-supported subscription, while Disney Plus also plans to introduce a cheaper membership. The latter is expected to be available in much of the world by 2023.

“It's pretty clear that it's working for Hulu, Disney is doing it, HBO did. We have no doubt that it works,” added Hastings.

Given the privacy concerns that any ad-supported subscription generates, Netflix understands that it does not intend to use a tracking system to collect data:

“In terms of profit potential, the internet advertising market has definitely advanced, and now you don't have to incorporate all the information about the people you used to incorporate. We can stay out of that and really focus on our members, creating that great experience,” he concluded.

Losing 200,000 users isn't the only thing Netflix is worried about. The company expects to lose 2 million subscribers in the current fiscal quarter due to a significant slowdown in its growth. Offering a cheap subscription is part of the strategy to try to stop the decline.

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