Netflix is experiencing one of its worst times in a decade as thousands of subscribers are cancelling their subscriptions. In its first-quarter report, the streaming giant lost more than 200,000 subscribers with a further 2 million expected to be cancelling their subscriptions next quarter.
This loss which was unprecedented caused a share collapse of up to 35% showing the shock that investors got after almost a decade of non-stop growth.
Netflix is attributing this bad news to a variety of different factors. First is the Russia-Ukraine crisis which forced the giant to cancel more than 700,000 subscriptions in Russia. As a matter a fact, if you put this into context Netflix actually gained about 200,000 subscribers but this was well below the promised 2 million subscriptions during the start of the year.
Netflix has also blamed password sharing for its loss which according to the streaming giants accounts for more than 100 million households worldwide.
However, even accounting for these reasons the numbers still do not quite explain why Netflix has not been growing at its current rate. While Netflix may threaten to take actions like cracking down on password sharing between friends and family this will not do much to bolster their ratings. Its issues go a little farther than this.
Raising Subscription Prices
One of the main reasons for Netflix’s astronomic rise is the fact that it offered the best value in entertainment in terms of thousands of movies and TV shows for only $7.99. This was revolutionary at the time. Hollywood was still stuck on the big screen while TV was becoming ever expensive. Netflix provided a cheaper and more valuable alternative for viewers.
Since 2014 however, Netflix has raised the price of a standard subscription six times. The most recent hike has brought the price to $15.49; this is almost twice the original $7.99. While this might have been as a result of increasing demand, Netflix is today the most expensive streaming service with HBO coming second at 15$ a month.
When Netflix came about it was disrupting the movie industry, creating a whole new one in the process. But gone are the days that the streaming giant enjoyed almost monopolistic powers in the streaming industry. With streaming proving to be a goldmine for Netflix and perhaps only Hulu at the time, other media companies have joined the race. Today there is a proliferation of streaming platforms all around the world. Disney+, HBO Max, Apple TV and even Amazon Prime have risen to challenge Netflix’s hegemony.
Moreover, there has also been a significant rise in regional streaming services such as Showmax in Africa. These are threats to Netflix’s plan to expand in international markets as regional streaming services tend to understand their audiences better.
A lot of Bad Shows and Movies
With a proliferation of streaming platforms and rising subscription prices, the only way Netflix can compete is through its content. Netflix has also not been doing itself a lot of favours with this, as the content it has released has been mostly underwhelming, to say the least. So much so that even billionaire troll, now Twitter owner, has tweeted about the crazy content the platform comes up with these days.
The woke mind virus is making Netflix unwatchable
— Elon Musk (@elonmusk) April 20, 2022
Failures such as Cowboy Beebop, show just how much Netflix has fallen that it can’t even make famous anime adaptations that already had a massive proven audience appeal to that very same audience.
It also does not help that the platform has a serious problem with cancellation. Netflix’s famous cancellation has enabled it to avoid disasters and loss but has also denied them much-needed revenue. Subscribers get turned off when their favourite shows are suddenly cancelled. Fans of cancelled shows like The Order, The OA, The Society, Archive 81, and many more are still feeling that sting.
The platform also lacks big franchises that attract a specific massive audience. While platforms like Disney +, Amazon and HBO Max are coasting on franchises like Star Wars, The Lord of the Rings and Game of Thrones spinoffs, Netflix just doesn’t have this kind of a franchise to carry it even when times get hard.
The platform has thousands of shows and movies but one can argue that its only real massive crossover is Stranger Things and maybe The Witcher. Netflix just doesn’t have much in the way of big-time players in its lineup right now, and with how quickly it’s cancelling most shows, that probably won’t change much anytime soon.
Above all, Netflix is losing subscribers because the company became overconfident. Years of almost exponential growth have made executives and managers too confident to learn that the market is changing. Times have changed and so should Netflix.