After being the king of streaming for so long, Netflix will have to battle hard to stay in that position. Between the months of April and July, it lost almost a million subscribers as more consumers choose to eliminate using the program altogether.
The all-powering streaming service has now steadily lost subscribers for two consecutive quarters, but the decline was less damaging than first anticipated. When asked what prevented more people from leaving, the company’s CEO Reed Hastings responded, ‘If there was one item, we may suggest Stranger Things.’ The wildly popular new and fourth season of the popular show may have halted Netflix subscribers from quitting the streaming service.
In April, Netflix announced its first decline in subscribers since the year of 2011. This news was quickly followed by hundreds of job losses and a decline in the company’s stock value.
The number of subscribers lost recently was the highest in company history, with the US and Canada experiencing the greatest number of cancellations during the previous three months, then Europe.
It was “inevitable,” according to Guy Bisson, executive director of Ampere Analysis, that Netflix’s hold on the market would begin to wane. ‘When you’re the leader, there’s only one direction to go, especially when a large amount of competition launches, which is what Netflix has seen in the last couple of years,’ he says.
When the pandemic struck in 2020, people were left at home with few other options for entertainment and flocked to blockbuster hits like Squid Game, solidifying its status as a global powerhouse.
Indeed, Netflix still offers popular titles like The Crown, Bridgerton and Friends. The latter is so popular that it even has its own branded slot that can be played using the best casino bonus offerings on 888Casino. Despite all this, Netflix has found it difficult to retain the loyalty of its current subscribers and draw in new ones, particularly if people are now making budget cuts due to inflation and the increasing cost of living.
Intense rivalry exists between the business with services like Apple TV, HBO Max, Amazon Prime, and Disney+. When Netflix first appeared on the market, Blockbuster and other video businesses were seen as being obsolete. However, the disruptor is now turning into the disrupted. Some users have also been turned off by Netflix’s decision to raise the cost of its service.
The price increase is risky
In the US, a standard subscription is now $15.49, up from $14 in January and only just $11 in 2019. This was the package that lets users in the same household to watch on two devices at the same time. The basic and standard options in the UK have now each increased by £1 monthly since January, to £6.99 and £10.99, respectively.
Bisson continues that, ‘At some point, yes, they’re going to reach a threshold where a significant number of people say enough is enough. Because of the additional choice… price hikes are a riskier strategy.’
The business, which has a history of achieving double-digit growth, is currently seeing its most significant downturn in years, with revenue in the April–June quarter totalling $7.9 billion, up just 8.6% from the same period last year. As investors grow pessimistic about the company’s future, the share price has fallen more than 60% so far this year.
Netflix claims that it will accelerate growth by launching a new service that will be monetised by advertisements and by cracking down on password sharing, which according to one research costs Netflix $6 billion annually. In fact, there are already increased fees in various Central and South American nations for shared accounts. Netflix intends to use this new method as a template all across the world. Although the company has been aware of the password-sharing issues for years now, a solution has not yet been found.
But what about content?
Then, there’s the issue of content. As it tries to reach a wider audience, Netflix’s most important mission has gotten harder: making sure it has good content for people to watch. In the US, for instance, more and more new subscribers are getting older audiences, who have different tastes from the younger viewers who were early adopters of streaming.
Bisson comments that, ‘They’re increasingly competing for that generalist audience, so the breadth of content that is needed becomes much wider and that’s why I think people are saying ‘there’s now a lot of stuff I don’t like. It’s a very big challenge.’
By releasing episodes of Stranger Things’ fourth season in two batches this year, the business has already started moving in the direction of providing more frequent hits, but the “pressure is on.”