Netflix might be adding an ad-supported tier before the year is over according to the latest reports. The New York Times wrote about the bubbling effort at the streamer. Their piece indicates that executives have told employees that the lower-priced subscription tier could come in the last three months of 2022. That's way sooner than people thought it could be coming. Murmurs of a lower tier plan held up by advertising have been been around for years now. But, the volume has gotten louder at the beginning of this year. With the company losing so many subscribers due to a number of factors, it would seem leadership is trying to course-correct as quickly as it can. However, implementing an entirely different tier is hard work and it remains to be seen if they can abide by such a strict timeline.
"Our revenue growth has slowed considerably as our results and forecast below show," Netflix executives previously told shareholders in a press release. In the letter, these decision-makers then shifted blame for the shortcomings to password-sharing among users.
"Streaming is winning over linear, as we predicted, and Netflix titles are very popular globally. However, our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds," they added. "The big COVID boost to streaming obscured the picture until recently. While we work to reaccelerate our revenue growth – through improvements to our service and more effective monetization of multi-household sharing – we'll be holding our operating margin at around 20%."
All of this has led to shareholders suing Netflix. These individuals argue that they were mislead about the state of the company and the outlook for the future. In the document, the shareholders allege that Netflix "made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects." In particular, they too issue with the slower than forecasted growth for the streamer with the information available to them.
The document itself adds, "(Netflix's) positive statements about the Company's business, operations, and prospects were materially false and/or misleading and/or lacked a reasonable basis," considering how they were "exhibiting slower acquisition growth" and "experiencing difficulties retaining customers."
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