(Credit: Netflix)

In recent years, Netflix has begun clamping down on users bending the rules to increase revenue. In 2023, the streaming giant imposed restrictions on multiple household account sharing, ensuring users’ due payment by offering a more expensive subscription if they wish to use the same account across multiple households.

To alleviate the financial impact on low-income households, Netflix has discussed introducing a reduced subscription fee plan with adverts. The streamer’s cheapest plan has traditionally been ad-free, but as the company looks to finally introduce adverts, they warn ‘Basic’ plan users to upgrade to a higher-cost option or embrace adverts.

Customers currently using the platform in Canada and the UK began seeing a doomsday message on the TV app at the beginning of July. “Your Basic plan has been discontinued, but you can easily switch to a new one. Plans start at just $5.99 with upgraded features,” the ominous message read.

According to Reuters, Netflix added the smallest number of new subscribers in the past five quarters during the period between April and June 2024. This drop-off is most likely attributable to the streamer’s crackdown on password sharing and the warnings about advertisements on the basic plan. Still, it has also been suggested that UK stats could have been affected by a distraction of viewership during the Euro football tournament. 

LSEG data claims Netflix gained approximately 4.82 million subscribers in the second quarter of 2024. This signifies the smallest increase since the first quarter of 2023 and is roughly half of the 9.3million subscribers added in the previous quarter.

Despite these un-encouraging statistics, the site’s revenue is estimated to have risen 16.4 per cent to $9.53billion. If true, this figure marks the fastest period of growth since the second quarter of 2021. The recent ad campaign has attracted investors, too. So far in 2024, Netflix’s stock is up nearly 35 per cent, compared with a return of about 19 per cent on the S&P 500 index (.SPX).

In May, Netflix announced plans to build an in-house ad technology platform that will offer marketers a more dynamic experience with regard to monitoring ad performance and audience targeting.

Though Netflix is initially partnering with Microsoft to construct its advertising tech, it plans to become self-sufficient in this area. “Despite this progress, we continue to view advertising as a longer-term story and do not expect a material revenue contribution until 2025,” BofA Global Research analyst Jessica Reif Ehrlich stated on July 15th.