Having long been the king of streaming, Netflix he faces a tough struggle to keep his crown.
Between April and July the service lost nearly a million subscribersas an increasing number of people have decided to leave the platform.
The streaming giant has lost subscribers for two quarters in a row, but the decline has been smaller than feared.
When asked what slowed the exodus, the head of the company Reed Hastings he answered: “If there was only one thing, we could say “Stranger Things”“.
The new season of the fiction was a phenomenal success and may have helped stem the exodus of Netflix customers.
In April, the company reported its first loss of subscribers since 2011, followed by hundreds of job cuts and a sharp drop in its share price.
Rivals are challenging his dominance, while price hikes have had a negative impact.
Subscription losses on Tuesday were the largest in the company’s history, with the United States and Canada having the most subscription cancellations in the past three months, followed by Europe.
Guy Bisson, executive director of Ampere Analysis, said it’s “inevitable” that Netflix will start to see its grip on the market loose.
“When you are the leader, there is only one direction to go, especially when there is a great deal of competition, which is what Netflix has seen for the past couple of years.“.
This is a stark change for Netflix, which has enjoyed years of seemingly unstoppable growth, revolutionizing the way people around the world consume entertainment.
Its position as a global giant was cemented when the pandemic hit in 2020 and people, stuck at home with few other options for entertainment, dove into series like Squid Game and The Crown.
But with the return of pre-pandemic habits, Netflix has struggled to attract new memberships and maintain the loyalty of existing members, especially as rising cost of living pushes people to cut costs.
The company also faces stiff competition from Apple TV, HBO Max, Amazon Prime and Disney +.
Netflix’s move to make its service more expensive has also deterred some customers.
In the United States, the “standard” plan – which allows people living in the same home to watch on two devices at the same time – now costs $ 15.49, compared to $ 14 in January and $ 11 in 2019.
In the UK, basic and standard plans have increased by £ 1 per month since January, to £ 6.99 and £ 10.99 respectively.
“At some point, yes, they will reach a threshold where a significant number of people will say enough“said Bisson.
At the end of June, the company had around 220 million subscribers, a number still well above that of the competition.
But the company, which has long been accustomed to double-digit growth, is grappling with the worst slowdown in recent years, with revenues of $ 7.9 billion in the April-June quarter, up by only 8 billion. 6% compared to the previous year.
The company’s stock price fell more than 60% this year, due to investor aversion to its prospects.
“Netflix’s loss of subscribers was expected, but remains a sore point for a company that relies entirely on consumer subscription revenue“said Ross Benes, an analyst with Insider Intelligence.
“Netflix is still the leader in video streaming, but unless you find other franchises that have wide resonance, it will ultimately struggle to stay ahead of competitors who are looking to clinch its crown.“.
Netflix said it plans to revive growth with a new ad-supported service and changes to its password sharing policy.
In some countries in Central and South America, the company is already charging more for account sharing and hopes to replicate this model around the world.
However, the company has been aware of password sharing problems for years and has so far failed to find a real solution.
The company said it expects the least expensive, ad-supported subscription to launch in early 2023, starting with “a handful of markets where ad spend is significant“.
“Like most of our new initiatives, our intention is to launch, listen and learn, and iterate quickly to improve the offering.“said the company.
According to Bisson, the ad-supported service has the potential to attract both existing customers who are prone to unsubscribe due to price increases, and new families who are hesitant to subscribe.
Ultimately, it will be crucial for Netflix to have big hit series. The company has already taken steps in this direction by releasing Stranger Things season four episodes in two batches this year, but more work will be needed to improve.
Source: Bbc.
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