Here’s how the world’s biggest streamer is adapting to competition.
For months, Netflix has teased changes it’d be making to its service in order to remain competitive in a market now flooded with streaming platforms. The company had warned that a crackdown on password sharing was imminent, but hadn’t disclosed how or when it planned to prevent your kids from mooching your account. Now, we finally have a clearer picture.
Will Netflix add commercials?
Netflix has long positioned itself as a commercial-free alternative to traditional television and has resisted adding ads for years. But last July it announced it would unveil a lower-cost subscription with shows and movies interrupted by ads in early 2023.
A new, cheaper version of the service was made available last November. It’ll cost $6.99 a month and include four to five minutes of ads per hour of viewing. That’s $3 cheaper than the company’s basic plan and about half the cost of its standard subscription.
Netflix also said a “limited number” of shows and films won’t be available with this plan. The company’s chief operating officer Greg Peters estimated between 5 to 10 percent of its content won’t be included initially, but he says that number will shrink as Netflix continues to negotiate with studios and producers.
The company confirmed that the cheaper subscription also won’t allow users to download shows or movies.
How will Netflix limit password sharing?
Netflix knows it has a password-sharing problem. (Last April, the company estimated passwords were shared with 100 million households.) In the company’s early days, when it was enjoying remarkable growth, tackling the issue “wasn’t a high priority,” according to CEO Reed Hastings. But now that it’s starting to shed subscribers, Netflix has begun testing out a paid sharing feature, which it introduced in 2022 across Chile, Peru, and Costa Rica.
Subscribers there can pay an extra fee ($2.99 in Costa Rica, for example) to add up to two extra accounts for people outside their households.
Something similar will be rolled out here in the U.S. sometime in the first quarter, the company said in January. That means in 10 weeks or less your kids, your brother, or whoever else happens to be using your account, will have to pay to use it or get one of their own.
Finding the next Squid Game
Given the massive success of Korean TV series like Squid Game and All of Us Are Dead, Netflix says it wants to lean even harder into creating content abroad. It’s already producing shows and films in 50 countries and is looking to ramp that up. Netflix also predicts that over the long term, “much of [its] growth will come from outside the U.S.”
As the company said in a 2022 letter to investors, “We saw long ago that great stories can be made anywhere and loved everywhere.” Let’s hope the platform is feeling even more of that love soon, for the sake of its bottom line.
