Updated on April 26th, 2022
Streaming giant Netflix is currently challenged with dwindling subscriber base and a subsequent drop in the company's share prices. The company reported that it had lost 200,000 subscribers in Q1 2022, followed by a 35% stock price drop. To add fuel to fire, the streaming giant added that it expects to lose another 2 million in the current second quarter.
This is the first time Netflix has lost subscribers during a quarter in a decade. In a letter to its shareholders, Netflix blamed the slump on its subscribers sharing their passwords for the service with other viewers who watch Netflix content for free. “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,” the letter read.
“This is a big opportunity, as these households are already watching Netflix and enjoying our service. Sharing likely helped fuel our growth by getting more people using and enjoying Netflix. And we’ve always tried to make sharing within a member’s household easy, with features like profiles and multiple streams. While these have been very popular, they’ve created confusion about when and how Netflix can be shared with other households,” Netflix added.
The Real Raison d'etre
Netflix might have blamed it on the sharing passwords habit of the viewers but it has other worries as well. The first mounting pressure for the company is content. Like any other content creator, the company is dealing with its share of lack of original content. Despite a cornucopia of Adam Sandler, Will Smith, and Ryan Reynolds movies, Netflix is still lagging behind. The streaming company has had an influx of content from every major studio for a decade which made it stand out from all the streaming giants and gave it a kingly status.
The Originality Shortage
But now all the streaming rivals and fighting tooth and nail for more original content on their platforms. Disney and HBO Max excel in this aspect. Plus, there are other streaming services that offer similar content, so Netflix is striving for more original content. The content platform has had its share of original content that has appealed to its viewing community. For instance, "Shadow and Bone, a fantasy series based on the popular Grishaverse book series, proved to be very popular with our members. Over 55 million member households chose to watch this show in its first 28 days and we’ve renewed it for a second season. Sweet Tooth, based on the beloved DC comic, was another hit series with 60 million member households choosing this title in its first four weeks," reads the shareholder letter.
The letter goes on to describe other Netflix productions including shows and movies that have captivated its audience. But, a new show or a movie is harder to sell to an audience who id prone to watching blockbuster movies and famous network shows. Since there is a significant slump in the subscriber base, seems like Netflix needs a boost in its content efforts.
The second reason for the dwindling subscribership is the steep prices that Netflix has been charging its audience. With a reason change in prices, Netflix has now become the most expensive streaming service. The new pricing strategy placed the top tier for U.S. subscribers at $15.49 per month. HBO Max is now in second place charging its customers $15 per month.
What started at $7.99 per month has, since 2014, increased six times. It justified the price rise by saying that it wanted to "continue to offer a wide variety of quality entertainment options". While we do understand this justification as viewers, how can Netflix justify raising the prices six times in a span of 8 years? This raise is bordering on extortionate price rates.
It is important to note that Netflix had an onslaught of visitors during the lockdown. In Q1 2020, Netflix added a whopping 16 million subscribers. But the slump started in 2021. Against a forecast of 6 million subscribers, the company only added 4 million subscribers. If the company was losing subscribers why the steep increase in costs in 2022? Mind-boggling isn't it?
The number of rivals is increasing for Netflix as well. Disney, HBO Max, and Amazon Prime Video are all reasonably priced compared to the steep price chart of Netflix. The current streaming heavyweight champion will have to find a solution to bring back the subscribers to maintain its position as the champion in the heavyweight category of streaming giants.
Check out the Apple iPhone 12 Pro Max, 128GB, Pacific Blue - Unlocked (Renewed Premium) to watch some Netflix shows.
See related topic:
We hope you love our reviews! For your information, we do earn money from commission in the link in the content! For more information click here!