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Netflix will introduce a discounted ad-supported subscription plan THIS year

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Netflix tells workers it will roll out its planned ad-supported low-cost subscription plan in the last three months of THIS year after shares plunged as it lost 200,000 subscribers

  • Netflix revealed last month that it lost 200,000 subscribers in the first three months of the year
  • As a result, co-CEO Reed Hastings said the company is looking for a cheaper, ad-supported alternative to its $15.49 main plan.
  • Hastings said it would open ‘in the next year or two’, but on Tuesday it emerged the company was accelerating its plans
  • The cheaper alternative will be available from the last quarter of this year, according to an internal memo

Netflix has accelerated plans to introduce a cheaper, ad-supported plan for users who may be considering canceling the streaming service, as it tries to shake off a shockingly bad first quarter.

Netflix announced on April 19 that it had lost 200,000 subscribers in the first three months of the year – the first time in a decade their numbers have plummeted and a dramatic reversal of their goal of adding 2.5 million.

They said they expected to lose two million more in the second quarter, and the stock price fell significantly, wiping out about $70 billion of the company’s market capitalization.

In response, Reed Hastings, co-chief executive of Netflix, said the company was considering introducing ads on a cheaper subscription plan and would “find that out over the next couple of years.”

Still, a memo to employees, obtained by The New York Times on Tuesday, showed the pace of the proposal has picked up significantly and the new, cheaper offering will be introduced in the final quarter.

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Reed Hastings, co-chief executive of Netflix, said last month that the company plans to offer a cheaper, advertiser-backed streaming service within the next two years. The plan seems to have been accelerated considerably and the service is now due to be unveiled at the end of this year.

Netflix stock value plummeted after April 19 announcement of 200,000 subscribers lost

Netflix stock value plummeted after April 19 announcement of 200,000 subscribers lost

“Yes, it is fast and ambitious and will require compromises,” the note reads.

“Every major streaming company except Apple has or has announced an ad-supported service,” the note reads.

“For a good reason, people want cheaper options.”

The executives pointed out that HBO and Hulu have been able to “maintain strong brands while providing an ad-supported service.”

Netflix offers several plans to its 221.64 million subscribers – all ad-free. Its most popular program costs $15.49 per month, and it was unclear how much the new one would cost.

HBO Max charges $15 per month for uninterrupted viewing and $10 per month with advertising.

Netflix executives said the ad-supported tier would be introduced “in tandem with our broader sharing billing plans.”

The Netflix headquarters is pictured in Los Gatos, California

The Netflix headquarters is pictured in Los Gatos, California

Netflix's stock price closed Tuesday up 4.5%, but was still down from the April 19 update, when shares were at $350.

Netflix’s stock price closed Tuesday up 4.5%, but was still down from the April 19 update, when shares were at $350.

Netflix is ​​also in talks to partner with The Trade Desk, which helps advertisers with their online campaigns and which counts former chief financial officer David Wells among its members.

They also intend to crack down on account sharing.

“So if you have a sister, say, who lives in another city — you want to share Netflix with her, that’s great,” Netflix chief operating officer Greg Peters said on the call. business results.

“We are not trying to stop this sharing, but we will ask you to pay a little more to be able to share with her.”

He said the changes would take “about a year of iteration” to fully roll out.

Netflix stock rose around 4.5% on Tuesday, but has yet to rebound from last month’s rout.

The price was $348.61 when the market closed on April 19, fell to $226.19 on April 20 and was at $177 on Tuesday evening.

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