Netflix to cut password sharing, launch low-cost subscription

San Francisco (US): An unexpectedly sharp drop in subscribers has Netflix considering changes it has long resisted: Minimising password sharing and creating a low-cost subscription supported by advertising.

Looming changes announced late Tuesday are designed to help Netflix regain momentum lost over the past year. Pandemic-driven lockdowns that drove binge-watching have lifted, while deep-pocketed rivals such as Apple and Walt Disney have begun to chip away at its vast audience with their own streaming services.

Netflix's customer base fell by 200,000 subscribers during the January-March quarter, the first contraction the streaming service has seen since it became available throughout most of the world other than China six years ago. The drop stemmed in part from Netflix's decision to withdraw from Russia to protest the war against Ukraine, resulting in a loss of 700,000 subscribers. Netflix projected a loss of another 2 million subscribers in the current April-June quarter.

The erosion, coming off a year of progressively slower growth, has rattled Netflix investors. Shares plunged by more than 25 per cent in extended trading after Netflix revealed its disappointing performance.

If the stock drop extends into Wednesday's regular trading session, Netflix shares will have lost more than half of their value so far this year wiping out about 150 billion in shareholder wealth in less than four months.

The Los Gatos, California, company estimated that about 100 million households worldwide are watching its service for free by using the account of a friend or another family member, including 30 million in the US and Canada.