By Gabriella Silva
Netflix is bringing back cable TV and users are not happy about it.
The streaming giant single-handedly changed the way people watched television forever with its original absence of commercials becoming the consumer standard. However, this unique selling point may become a thing of the past as Netflix is now planning to include ads in its service.
The ongoing decision stems from the results of an earning report on April 19, 2022, which revealed that Netflix had lost 200,000 subscribers in its first quarter of the year. Being its first time in over a decade, the quarterly report revealed a drop in subscribers that caused the company to lose $50 billion in market value. The loss of subscribers is an outcome of out-of-home password sharing, which Netflix hasn’t made an effective issue until now.
Out-of-home password sharing affects Netflix’s streaming services as a large number of users aren’t paying for their own account. Netflix estimated that 100 million households worldwide are streaming content for free. With a continuous increase in prices to level out these factors, the company is opting for a cheaper streaming plan to gain subscribers back.
The cheaper plan comes with a major trade-off – advertisements. Netflix CEO Reed Hastings announced on April 9, 2022, that the company is considering advertisements for the very first time.
“Those who have followed Netflix know that I have been against the complexity of advertising and a big fan of the simplicity of subscription, but I am a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and are advertising-tolerant to get what they want,” said Hastings.
Despite the cost-efficient alternative, many users went to social media to express their disapproval of commercials on Netflix.
“I dislike commercials because it interferes with the content I’m already paying for as a Netflix user,” said Yong Kwon, a senior communication major.
Netflix isn’t the only service adapting to advertisements in the streaming era. Competitors such as Hulu and HBO Max have provided a variety of plans since the beginning of their launch. Disney+ will soon also introduce a cheaper subscription this year.
“It’s pretty clear that it’s working for Hulu. Disney is doing it. HBO did it. I don’t think we have a lot of doubt that it works,” said Hastings.
As both Hulu and HBO Max gained 3 million subscribers in the first quarter of the year, Netflix plans to move forward with their transformation as we head towards a new era of streaming services.
Netflix says it will include ads on its streaming service.