Netflix has dominated the streaming industry for the past decade, although others are catching up. That is the most apparent conclusion from Netflix's jaw-dropping revelation on Tuesday: Instead of acquiring almost 2 million customers in the first quarter, as anticipated three months earlier, it lost 200,000. Even worse, Netflix anticipates another 2 million customers to leave in the next quarter.
Netflix's stock collapsed as a result of the revelation, losing 35% of its value and costing the firm a significant amount of money. Worse, Netflix expects to lose another two million customers in the second quarter of this year. In the first quarter of 2021, Netflix, on the other hand, attracted roughly four million new customers, indicating a dramatic drop in only one year. If this trend continues, the service that effectively developed subscription streaming is in for a rough ride.
Netflix's near future is beginning to look dismal, and while it would take something completely catastrophic to force the service to shut down, it could easily lose its dominant position in the industry. The question now is whether Netflix can get back on track, preferably sooner rather than later. The streaming service might theoretically save things, but it will require a lot of work because it is already dug a very deep hole.
When it comes to determining why Netflix is losing customers, there are various factors to consider. The most evident is that, despite an inflow of Ryan Reynolds films, Netflix's offering is not what it used to be. Netflix acted as a sort of streaming center for almost a decade, carrying shows from almost every major studio. Now that the majority of those studios, networks, and cable channels have launched their own streaming services in recent years, Netflix is being forced to rely more and more on its own original content to attract users. This is a more difficult sell than being able to offer current blockbuster films and popular network shows.
Furthermore, if a member develops devoted to a Netflix Original program, the show is frequently terminated after only one or two seasons with no end to the storyline. Netflix used to offer its originals at least a few seasons to try to acquire an audience, but now it abandons them if they do not become successful and earn additional subscribers immediately away. On top of all of that, there is the matter of Netflix's ever-increasing subscription price hikes. Netflix was formerly a relatively cost-effective source of entertainment, with its basic streaming subscription costing only $7.99 per month. Since then, Netflix's value for money has slowly degraded due to frequent price rises, resulting in the current basic price of $15.49 per month, nearly doubling the previous $7.99 price tag that had been in place for quite some time. Price increases are unavoidable in business, but six in eight years is a big number.
Arrogance, built from years of being the practically unchallenged ruler of subscription streaming services owing to being first to market, might be another cause of Netflix's slide. While Amazon Prime and Hulu have long attempted to encroach on Netflix's turf, the arrival of Disney+, HBO Max, Paramount Plus, Peacock, and others has increased the fight for customer spending. Netflix, on the other hand, does not appear to be making any major moves to counterbalance all of these new competitors. The corporation appears to believe that keeping the line open is the best choice, but given the projected loss of millions of subscribers by 2022, this may change.
For the time being, Netflix is content to remain the most costly streaming provider, having just surpassed HBO in that respect with a $15.49 increase. Netflix also stands by its binge-watching structure, and while it is a well-known feature of the site, practically every other competitor's most successful release plan is one episode every week. The weekly gap has reinvigorated the tradition of conversation and debate about what will happen next week, and Disney+ has made the most of it with its Marvel Studios and Star Wars programming. The Netflix binge model requires everyone to watch the entire season at the same time in order to participate in the discussion, which many people simply do not have the time to do, resulting in much longer seasons between them. HBO Max and Peacock have also found success by providing a lower-cost, ad-supported option, akin to Hulu, which Netflix still does not provide.
Outside of not cancelling series like The Order too soon, the simplest way for Netflix to recoup members is to lower its prices, but in the business world, that is frequently a non-starter, especially for publicly traded corporations. At the absolute least, Netflix should try to recover customer loyalty by promising not to raise its prices for at least five years, giving budget-conscious customers some peace of mind, especially in a period when a pandemic has wreaked havoc on many people's budgets. They may potentially implement a lower-cost, ad-supported tier, which sources indicate the business is currently exploring. While some may consider commercials on Netflix to be blasphemy, a tier with ads would almost certainly result in higher subscriber numbers and revenue.
According to sources, Netflix is considering switching to a weekly release strategy for at least some of its original shows, which would reduce member turnover significantly. Sure, one may wait until all of the episodes are broadcast, but by then, they will be essentially shut out of the show is worldwide debate. Sadly, this adjustment will not arrive in time for the fourth season of Stranger Things, since one can only imagine the amount of weekly social media buzz a program of this magnitude might produce. The only thing Netflix can do is keep losing material licensed from other producers, which will most certainly continue to disappear as more and more arrangements are signed before the launch of services like HBO Max and Paramount+ expire.