The rise of Netflix is one that few could have predicted when witnessing the small piece of cardboard flop through our letterboxes from the new DVD rental company. However, with a few pragmatic adjustments, the website soon turned into one of the media behemoths of the world, not only pulling in millions of subscribers but creating some of the most inspiring work of recent years. However, the company has lost subscribers for the first time in over a decade.
200,000 users are said to have vacated the streaming platform, with reports now suggesting that the exodus of the audience has only just begun. Netflix themselves have suggested that they expect to lose another 2 million subscribers in 2022.
Netflix are desperately trying to re-balance the situation and have re-focused efforts on gaining new subscribers from previously untapped markets such as India and Africa, with the latter already driving another 1 million subscribers to the platform.
US and Canada, however, have offset the gains by losing considerable numbers as new streaming platforms look set to saturate the market and cut a piece of the Netflix pie for themselves. In North America, 600,000 subscribers cancelled their memberships after Netflix announced a price rise, while another 700,000 users in Russia left the platform after Netflix ceased operations in the country to protest Russia’s invasion of Ukraine.
Of course, as with any conversation about Netflix recently, it is hard to ignore one facet of its model that refuses to go away: password sharing. While there are 221.6 million subscribers around the globe, there are another 100 million households who benefit from password sharing.
“The big Covid boost to streaming obscured the picture until recently,” a statement to shareholders read. “Our relatively high household penetration — when including the large number of households sharing accounts — combined with competition, is creating revenue growth headwinds,” management said.
The group are now intent on using advertising to make the platform cheaper for users. “Those who have followed Netflix know that I have been against the complexity of advertising, and a big fan of the simplicity of subscription,” co-CEO Reed Hastings said today. “But as much as I am a fan of that, I am a bigger fan of consumer choice. And allowing consumers who would like to have a lower price, and are advertising-tolerant get what they want, makes a lot of sense.”
