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In the 2022 first quarterly report of Netflix, it was reported that Netflix lost 200,000 subscribers. This is the first drop in customers for the service since it started generating subscriptions. Netflix also predicts that whey will lose another two million global subscribers between April and June.
As a result of this decrease in subscribers, Netflix’s stock shares dropped by 35%.
There are several possible reasons why Netflix took a blow in its subscription after maintaining growth for more than a decade.
Netflix pulled its service out of Russia. The streaming service had announced that it would pause all future projects and acquisitions from Russia, joining a growing list of companies that have cut ties with the country. It is protesting Russia’s invasion of Ukraine and lost 700,000 subscriptions in Russia alone.
There has been growing competition in streaming services. The launches of Disney+ in 2019, HBO Max in 2020, and Paramount+ in 2021 have seen these US-based entertainment companies step into streaming. There are a growing number of players in the market. Every major studio that launches a platform means less content Netflix can distribute – when the major studios launch they remove their content from Netflix. For example, “The Office” and “Friends,” two hugely popular programs which were previously available on Netflix, were removed from Netflix and introduced back to their studio’s platform (“The Office” ended up on HBO Max and “Friends” was added to Peacock).
An indicator of increased competition can be seen in the Walt Disney Company Report, which reported an astonishing 11.8 million subscribers to its platform over the three months ending in December — more than 42% ahead of Netflix’s tally — while reiterating its view that Disney+ will grow to between 230 million and 260 million subscribers by the end of its 2024 financial year.
Password sharing between households decreases overall customer count. Marketing researchers estimate that over 100 million households can view Netflix without payment because a Netflix account could be logged on to more than one device. Netflix is planning to crackdown on password-sharing globally. The company indicated that it will expand a test introduced last month in Chile, Peru, and Costa Rica that allows subscribers to add up to two people living outside their households to their accounts for an additional fee.
“I believe Netflix has a large group of loyal fans who will probably never end their subscription,” said Melody D., a freshman at AISG. “‘Stanger Things’ is such a staple of Netflix that I am quite sure people will pay the subscription just because of how reminiscent the title is.”
“Honestly, Netflix’s content was pretty lame and redundant in these past years,” said Mandy M., a sophomore at AISG. “A lot of my friends canceled their membership because they barely found any recent originals interesting to watch.”
Despite the proliferation of streaming platforms, Netflix still holds the most subscribers globally, with more than 221 million subscribers. It also created classic titles such as “Stranger Things” and “Squid Game,” shows that generated millions of subscriptions and profits for Netflix. Most experts still agree that viewers are likely to subscribe to multiple services for content diversity, so Netflix still isn’t in the danger zone yet.
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