Between April and July, nearly a million subscribers left. The streaming behemoth lost members for two consecutive quarters, but the loss was smaller than expected.

Published: 20 July 2022

Reed Hastings, the company’s CEO, said “Stranger Things” delayed the exodus. The new season of the hit show may have helped Netflix retain users. The company recorded its first subscriber loss since 2011 in April, prompting hundreds of job losses and a share price decrease.

US and Canada saw the most cancellations in the past three months, followed by Europe. Guy Bisson, executive director of Ampere Analysis, said Netflix’s market dominance was “inevitable.”

“When you’re the leader, there’s only one route to go, especially when a lot of competitors launches,” he remarked. Netflix enjoyed years of apparently endless development as it revolutionised global entertainment.

When the 2020 epidemic arrived, those confined at home with few entertainment options flocked to Squid Game and The Crown. Netflix has struggled to attract new sign-ups and retain existing users as pre-pandemic habits resurface, especially as the cost of living rises.

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Apple TV, HBO Max, Amazon Prime, and Disney+ are additional competitors. Netflix made Blockbuster obsolete. The disruptor is being disrupted. Netflix’s price hike has deterred some customers.

A “regular” plan in the US costs $15.49, up from $14 in January and $11 in 2019. Basic and standard plans have both increased by £1 since January to £6.99 and £10.99.

Yes, they’ll reach a point where many say enough “said Bisson. Price spikes are riskier with more options. Netflix is luring back more deserters than its rivals, according to studies. Many households say it’s the streaming service they’d keep if they could only have one.

End of June, the corporation had 220 million customers, far more than any competitor. The company, which has typically seen double-digit growth, posted $7.9bn in revenue in the April-June quarter, up 8.6% year-over-year.

Investors have soured on the company’s prospects, causing its share price to plunge 60% this year. “Netflix’s subscriber loss was predicted, but it remains a sore point for a firm that is totally dependent on subscription revenue,” said Ross Benes.

Netflix is the leader in video streaming, but unless it finds more popular franchises, it will fall behind. After-hours trading rose more than 7% on relief that losses weren’t worse. The company predicted a two-million-subscriber loss.

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Netflix plans to boost growth with a new ad-supported service and by cracking down on password sharing, which costs the company $6bn a year. Some central and south American countries currently charge more for sharing accounts. This model will be replicated globally.

The corporation knows about password sharing difficulties but hasn’t found a solution. The company stated it was “encouraged by our early learnings and ability to convert users to paid sharing in Latin America”

It claimed its less priced, ad-supported option would arrive in early 2023 in “a few of advertising-heavy markets.” “Like most of our new projects, we plan to launch, listen and learn, and iterate quickly,” the business added.

Mr. Bisson said the ad service may entice both existing consumers and new homes hesitant to subscribe. Netflix might make as much or more per user than with subscriptions, he said.

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Assuming they get the price and advertising correct, it might be a smart move for them “saying, Netflix’s most crucial duty is ensuring it has quality programming for people to watch, which has become harder as it reaches a wider audience.

In the US, new sign-ups are older and have different tastes than early streaming converts. “They’re vying for that generalist audience, so the variety of information needed becomes much greater,” Mr. Bisson said. “It’s tough.”

Eric Steinberg of Whip Media said Netflix needed “more frequent hits” and should stagger releases to keep subscribers. Stranger Things’ fourth season has been released in two instalments this year, but “pressure is on,” he noted.

“They don’t have the sandbox anymore,” he said. People will reevaluate how much they’re willing to spend in an inflationary climate and with quality programming [at the competitors].

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