What Neflix Subscriber Drop Means For Streaming

There was a time when Netflix dominated the streaming category so strongly that it became synonymous with the activity itself. But the monopoly that Netflix once held is fading. Platforms like Apple TV, HBO Max, Disney+, Crave and Amazon Prime compete for viewers. Netflix reported a loss of 200,000 subscribers in the first quarter of 2022, in contrast to the more than 2 million subscribers it forecast to add. It is the first time in a decade that the company has reported a loss of paid users. That announcement, in April, led to a 35 percent drop in share prices.

As Netflix’s growth slowed, HBO said it added nearly 13 million subscribers in 2021 across HBO and HBO Max. In May, Disney reported adding 7.9 million subscribers in its second quarter, and Apple TV said it increased new viewers by 25 percent in March after the movie. CODA—which airs on the platform— won an Oscar.

Netflix attributed its slowdown due to a variety of factors in a letter to shareholders, including account sharing – meaning one paying customer gives their password to others – the disruption caused by the pandemic and increased competition. from rival transmitters. “As traditional entertainment companies have realized that streaming is the future, many new streaming services have also launched,” the company said.

“Given the expansion of other streaming options, the fact that Netflix is ​​what we do to ‘chill’ is coming to an end,” says Paul Moore, a professor of sociology at Metropolitan University of Toronto who specializes in human history. media.

So will Netflix bounce back? And what does its decline mean for the streaming industry as a whole?

The problem with streaming services

The start of the pandemic was prime time for streaming services, as drunken-friendly entertainment was much-needed escapism during lockdowns (remember the tiger king Covid phase?). Netflix has 222 million subscribers globally, and in the US and Canada, 75 million of a total of 142 million households have a subscription to the platform. The Guardian reports. (Netflix says that password sharing accounts for an additional 30 million households in North America.) But as lockdowns were lifted and people returned to in-person activities in 2021, people’s viewing habits have changed. Combine this with increased competition in recent years, and the landscape that Netflix once dominated has changed.

A 2021 survey by Verizon Media and Publicis Media found that 56 percent of streaming consumers are overwhelmed by the number of services to choose from. An article published in The conversation argued that the more subscription services available, the more money people will have to shell out to watch a movie or TV show that is suddenly only available on one platform. The possible result? A return to illegal streaming or piracy.

Also, the more platforms to choose from and pay for, the more likely passwords will continue to be shared. Moore describes the common case of an extended family where each household subscribes to a different service but shares logins with each other. This is especially true with the return of post-pandemic life; someone taking advantage of a family member or friend’s login might not see the benefit of getting their own subscription. To make up for lost revenue, Netflix plans to crack down on password sharing next year, charging primary account holders a fee for each secondary login. Currently, four logins are allowed for a premium account and two logins for a standard account.

Some experts posit that the decline in the quality of original content on the platform is to blame. In July, cabling said Netflix is ​​losing its cool thanks to competitors who were putting out attention-grabbing programming (think Apple TV’s ted lasso either Wanda Vision on Disney+). In the first quarter of 2021, Netflix content accounted for about 50 percent of the original series that people around the world wanted to watch online, according to data from Parrot Analytics, an audience engagement startup, a statistic down from 65 percent two years earlier. . It’s even releasing potentially exciting titles amid subscriber woes: In May, Netflix canceled Meghan Markle’s animated series, Pearlas part of his “strategic decisions” around animated series.

On by Esquire list of the best 18 TV shows in 2022 so far, only some are Netflix series. “The buzz around Netflix has stalled,” says Moore. Other streaming platforms could meet a similar fate, prompting executives to take action early. Bracing for some stiff competition, Amazon recently bought the MGM studio, the creator behind such classics as james linkin an effort to attract more consumers.

How streamers can compete

According to Deloitte’s 2021 Media Trends report, streaming services spend around US$200 per year on marketing to acquire a single subscriber. That means they must “earn monthly subscription fees from a new subscriber for up to 15 months, depending on subscription level and cost” to recoup ad spend. In other words, platforms need people to stick around to make a profit.

Sam Maglio, an associate professor of marketing and psychology at the University of Toronto’s Scarborough campus, thinks streaming services may change the kinds of new productions they invest in. way for these companies to attract new subscribers,” says Maglio. We may see less “background television” programming, in favor of award-winning productions.

Telecommunications providers may also offer bundled services more frequently. Last month, Telus announced the launch of Stream+, which includes Netflix Premium (allowing you to watch four screens at once, compared to a standard one-screen subscription), Apple TV+, and discovery+ for $25 a month. The Verizon Media and Publicis Media survey found that consumers who use streaming platforms access five services on average, which can be added up: Nearly half of those surveyed said they worry about how much money streaming services cost them.

Maglio thinks bundling could be what helps offset price increases from individual providers. “It’s the same idea as buying a cheap meal from McDonald’s, where you don’t think about how much you would pay for each individual item,” he explains, adding that consumers don’t like to think about how much an individual service costs, and are more likely to pay a price for a package that seems like a good deal. “You’re buying the whole package, and if it’s offered at a discount, all the better.”

Another way Maglio sees services to retain customers is, interestingly enough, contrary to the bundling concept: an a la carte model, similar to the one offered by Prime Video, could become more popular where subscribers can pay for the content they actually get. come, instead of all that is available. “Would there be room for some kind of customization within an individual streaming service?” He asks. “It costs a lot of money to do something like the power of the dogbut if you just want to have arrested development, Seinfeld Y The office at their fingertips, users could pay a lower rate for ‘background TV’ or convenient favourites”.

Cost increases are another avenue for streaming services to stay profitable. In January 2022, Netflix increased its standard plan by $1.50, while the premium plan increased by $2. In May, Disney hinted that there might be a price increase. But raising prices for customers is likely to only increase the problem of password sharing. “If I were running a marketing department, I would want to focus on a group and work through that decision very carefully before making any decision that would make customers angry enough to stop subscribing altogether,” says Moore.

“The thing that all of these services are going to have to be very careful about is making the cost too high for the value. We are clearly in a time of incredible change.”

Leave a Comment