Netflix aims to curtail password sharing - and bring in ads

An unexpectedly sharp drop in subscribers has Netflix considering changes to its service that it has long resisted: minimizing password sharing and creating a low-cost subscription supported by advertising

SAN FRANCISCO -- An unexpectedly sharp drop in subscribers has Netflix considering changes to its service that it has long resisted: Minimizing password sharing and creating a low-cost subscription supported by advertising.

The looming changes announced late Tuesday are designed to help Netflix regain momentum it's lost over the past year. Pandemic-driven lockdowns that drove binge-watching have lifted while deep-pocketed rivals such as Apple and Walt Disney began 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 it's seen since the streaming service became available throughout most of the world outside of 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 another key constituency for Netflix — its shareholders. After revealing its disappointing performance, Netflix shares plunged by more than 25% in extended trading. 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.