As Netflix prepares to introduce commercials to its streaming service sooner than originally expected, consumers are beginning to wonder if the company’s decision is the result of major Disney+ subscriber growth.
According to CNET, Disney+ has already grown to 137.7 million members after only two years. Although Netflix has 221 million subscribers, the streaming service experienced a 200,000 account decrease since the beginning of 2022. The media outlet noted that this was the first time Netflix experienced an overall decline since its DVD-by-mail services.
Meanwhile, Disney+’s latest net increase was 7.9 million subscribers in the latest period. Disney also revealed that Hulu subscribers increased to 45.6 million and ESPN+ saw growth to 22.3 million.
As previously reported, Netflix executives announced to employees that they are planning to roll out a commercial, lower-price, subscription plan. The company would notably introduce the plan during the final three months of 2022. Netflix is also planning to crack down on password sharing among subscribers. This will occur around the same time as the new plan will be introduced.
“Every major streaming company, excluding Apple, has or has announced an ad-supported service,” the Netflix executive shared with employees. “For good reason. People want lower-priced options.”
In response to the news about the commercial plan, numerous Netflix users are now threatening to cancel their subscriptions.
Netflix Co-CEO Reed Hastings Speaks About the Commercial Plans
During the company’s first-quarter earnings call with investors, Netflix co-CEO Reed Hastings spoke about the commercial plans. “One way to increase the price spreading is advertising on low-end plans and to have lower prices with advertising. Those who have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription.”
However, the Netflix co-CEO said the commercial plan would be a “positive” for subscribers. He believes that the plan will offer “consumer choice” and the ability to get a cheaper subscription. “Allowing consumers who would like to have a lower price and are advertising-tolerant get what they want makes a lot of sense. So, that’s something we’re looking at now, we’re trying to figure out over the next year or two. Think of us as quite open to offering an even lower”
Although he was asked if Netflix would be testing out the commercial subscriptions before they are rolled out to all subscribers, Hastings stated he didn’t think the company had a lot of doubt that the option works. “I’m sure we’ll just get in and figure out as opposed to testing it and may get in or not. I think we’ll really get in.”
Greg Peters, Chief Operating Officer at Netflix, also explained the commercial option. “So if you’ve got a sister, let’s say, that’s living in a different city – you want to share Netflix with her. That’s great. We’re not trying to shut down that sharing. But we’re going to ask you to pay a bit more to be able to share with her.”