Netflix introduced a new cinematic experience to gazillions of movie enthusiasts around the world. The steaming company attracted millions of people to its subscription plan. More so, it became one of the biggest platforms for entertainment for young and adults equally.
However, the competition in the movie productions around the world dragged Netflix into a tough state. For the first time in over 10 years, Netflix has lost over 200,000 subscribers. It is interesting to know that when the news streamed across news platforms, the Netflix shares fell around 20%.
The company had over 221.84 million subscribers at the end of 2021. However, in the first quarter of 2022, the company has gone through a lot of drastic and unpredictable changes. The prominent ones are the introduction of ad-supported subscription plans with lower prices and the cancellation of all the services in Russia. These reasons have caused a significant loss to the overall stature of Netflix.
Even Wall Street, noticing the unstoppable rise of Netflix, predicted that the company will add up around 2.5 million subscribers in the first quarter of 2022. However, the uncertain situation and poor strategic planning inflicted a heavy loss. Let’s know what are the reasons for such an enormous loss of subscribers and how Netflix would cope with it.
Sharing Netflix accounts
Despite all the difficulties, Netflix has a fair number of subscribers. The streaming company is still enjoying 222 million household subscribers around the world. There is a twist that Netflix doesn’t like and admire. The subscribers have shared their Netflix accounts with over 100 million people. It is limiting the subscription numbers of Netflix.
The company has already waged a brutal crackdown on Netflix users. Especially in Chile, Peru, Costa Rica, and several U.S. states. The company wants to outrightly stop account sharing to increase the number of subscribers. This approach may seem accurate and legit, but has the potential to decrease the user’s interest in the streaming service.
Especially, when there are many more such as Hulu, HBO, Amazon, Peacock, Apple, and Disney. CEO of Netflix Reed Hastings said that the company has enough subscribers and restricting the shared accounts should not have a top priority. However, Netflix wants to improve all aspects of its services and, in doing so, is ready to face the consequences too.
For any big company, following the policies of the government and increasing its credibility is of top-most priority. The Russian invasion of Ukraine brought troublesome sanctions for big tech companies. Facebook, Instagram, Twitter, and YouTube blocked their services for all Russians. Moreover, the electronic payment systems also stopped working there.
Now, Netflix had the only choice to block its services for Russians too. Pulling out from Russia cost Netflix around 700,000 subscribers. This is not the only shock Netflix has to bear. Another 600,000 people in the U.S. and Canada stopped using the Netflix streaming service because of exorbitant prices. These losses inflict heavy damage in terms of the decreased share price.
Ads supported subscription plan
However, Netflix is hopeful to offset these damages from subscriptions elsewhere, such as in India and Japan. Netflix is also adopting an ad-supported subscription plan at a lower price as compared to the plan without the ads. This has put the Netflix enthusiasts in a strange situation.
Most of the users want to enjoy the service with no interruptions. Whereas the ads would take more time and create more problems for the viewers. In this regard, the chief executive Hastings said, “Those who have followed Netflix know that I have always been against advertising. I’m a big fan of simple and seamless service. Moreover, he also said, “I am a bigger fan of consumer choice.”
The price difference in the subscription plans will create a competition problem for Netflix. In the UK only, over 1.5 million subscribers have left the platform. Surprisingly, 38% of them said that the prices are too high for them to afford Netflix.
These challenges have caused the loss of 200,000 subscribers in the first quarter of 2022. However, there is a hope that Netflix will hook up more subscribers through the captivating TV series and movies.
Netflix has seen the pandemic as a point to infinite growth and relentless prosperity. However, this has obscured the fact that there might be some decisions that can cause damage to the company. This is the sole reason that Netflix is facing a tough time now. There is a tough competition with Disney and Apple TV and apart from these competitors, there are many others too.
Netflix has pulled out all the streaming services from Russia. It has provided ad-supported subscription plans with a lower price package. Moreover, Netflix has increased the prices when inflation is battering people around the globe. These all conditions have combined to inflict a heavy blow to Netflix’s subscriber numbers. To make a comeback, Netflix has to produce stunning and likable TV series and movies. So that it can grab the undivided attention of the users from around the world.