Losing can make giants reconsider their stature. Case in point, Netflix.
For the first time in 10 years, the world’s most popular streaming platform did the opposite of gaining subscribers, making it realize that it’s not as invulnerable as it believes.
Netflix CEO, Reed Hastings, had a word with shareholders during the company’s most recent quarterly earnings call. Hastings revealed that Netflix had lost 200,000 subscribers in the first quarter of 2022, and it will only get worse. After steadily gaining subscribers for the past 10 years, Hastings added that the platform will lose at least two more million accounts in the next quarter despite the return of Stranger Things, Ozark, and Better Call Saul, among others.
However, Hastings doesn’t believe that the platform’s diminishing numbers are the result of its competitors offering similarly compelling content for less. Instead, Hastings pointed out that the issue is with account sharing. Hastings explained that out of the 222 million paying households that watch Netflix, an additional 100 million homes are using shared accounts. This would imply that Hastings believes Netflix could reel in a hundred million more subscribers (or at least close to it) if everyone paid for their subscriptions individually, which is wishful thinking.
The only silver lining here is that account sharing is not a “high priority to be working on” right now. Of course, it’s worth mentioning that Netflix is already running a trial in select countries to not lose as much money from sharing accounts.
Going back to the topic of changes, losing 200,000 subscribers in the first quarter doesn’t hurt Netflix as much as the 35% stock dip, losing the platform billions in market value.
Netflix can stop the bleeding by addressing key issues like raising subscription prices in the United States earlier this year. Netflix is now more expensive than HBO Max and Amazon Prime Video as well as the entire Disney+ Bundle (Disney+, Hulu, and ESPN+). It’s difficult to justify spending $15.49 a month for a service whose supposed edge is a more expansive library, which is no longer the case.
In comparison, HBO Max once enjoyed a hybrid release schedule for Warner Bros. movies and continues to benefit from a 45-day window from big franchise movies, which isn’t a long wait. On the other hand, the Disney+ bundle is what it is, a bundle. It comes with a trio of services that equal if not better what Netflix has to offer. Plus, as we all know Disney+ has Marvel and Star Wars. Finally, an Amazon Prime Video membership comes as a benefit to Amazon’s premium membership program, Amazon Prime, which also includes a handful of other valuable add-ons.
Netflix’s pricing, when compared to what it has to offer, no longer makes as much sense. To make matters worse, Netflix just can’t stop canceling shows.
Only time will tell if Netflix can retain its spot atop the perch. So far, it’s still the leading streaming platform across the globe. Not to mention, Netflix continues to enjoy record-breaking ratings as follow-up seasons to Bridgerton as well as originals like The Adam Project all make their way to the service. The only question now is if the decline will force Hastings, who described himself as a “bigger fan of consumer choice,” to consider adding a more budget-friendly ad-supported plan like Disney.
