Netflix’s new cut-price advertising-led subscription tier was meant to be its saviour.
It would bring in more subscribers and help to retain existing ones who were thinking about leaving because they could no longer afford the standard service.
AJ Bell’s Russ Mould said: “Not only would it bring in more revenue on the subscription side, but Netflix would also be paid for carrying third party promotions. Furthermore, the lower price point might even persuade people who previously borrowed a friend or family’s account to get their own one.
“Early reports suggest take-up has been disappointing, sending its share price crashing nearly 9% in a day.
“Despite having some big name shows that have become water cooler discussion points in the office and on social media, such as Wednesday and the Harry/Meghan documentary, the sign-up rates to the ad-led subscription tier apparently haven’t lived up to expectations.
“Reports suggest some advertisers have been offered refunds because Netflix hasn’t delivered the expected audience figures.
“Billionaire investor Bill Ackman of Pershing Square dumped his company’s holding in Netflix as soon as the advertising plan was announced, saying its business model had changed as advertising income was unpredictable. Many people mocked Ackman after Netflix’s share price then soared, but they’re not looking so clever now.”