Things are not going according to plan at Netflix at the moment. The company’s stock price initially plunged 40 percent after the market leader was announced to lose subscribers for the first time in more than a decade. We’ve looked at where the loss of subscribers may come from and how the streaming service plans to respond to the trend in the future.
Many old subscribers are canceling Netflix
Netflix lost 200,000 subscribers in the first quarter of 2022. Projections and calculations show even a worst-case scenario rather than progress into the next quarter. Netflix is expected to lose more than two million subscribers in the next quarter. According to a report by The Information, more than 13 percent have canceled their Netflix subscription for more than three years. Eight percent of clients have been with them for two to three years, and 19 percent have been with them for at least one year before they quit.
So opt-outs are constantly increasing and jeopardizing the main profit of the streaming giant. The fact that long-term customers in particular are increasingly canceling their subscriptions is an alarming situation for the company. We want to know why Netflix customers are canceling their subscriptions.
Netflix cancels the series
Netflix series cancellation is one of the main reasons why so many subscribers are canceling their Netflix subscription. Fans are often upset by Netflix’s decision to drop a particular series. Recently, Netflix has suspended some of the most popular series such as “Legacies”, “Archive 81” or “Space Force” due to the low subscriber count. These sudden cancellations are causing discontent among Netflix subscribers. They don’t feel comfortable with it, so they leave the streaming service to look for something else.
In addition, Netflix is losing out on many of its series to the original rights holders, who now run their own streaming services. Disney+, Paramount+, or Peacock are just a few of the studio-run services that bring series and movies back together.
Subscription price hike
Netflix has been constantly flipping the price spiral for several years now, much to the dismay of customers. After the recent price increase in the US, the cap may have been reached or exceeded. Several customers complained on social media after the premium plan increased by $2 and is now $19.99 per month. Other services are much cheaper here.
“Consumers vote with their wallet,” explains Brendan Brady of the analytics firm Antenna.
Netflix does not have a unique sale offer
Recently, analyst Horace Didio explained that the main problem with Netflix is the lack of a unique selling proposition. The analyst noted that Netflix’s strategy of focusing on as many products as possible no longer works in the long term. Other services have developed a strong position here.
When it comes to market share, Apple TV + can only be found under Others for now. However, the latest Apple Awards at the awards ceremony clarifies the standards for display quality. This offer could be the reason for a more targeted purchase of the subscription in the long run.
Netflix offers reasons
Netflix also gives (to its contributors) reasons why business can’t go the way you want it to. In a letter to shareholders, Netflix said revenue growth had “slowed significantly,” citing “a large number of families sharing accounts” and “competition” as reasons for the slowdown. Netflix estimates that 222 million households are paying subscriptions (account sharing) with another 100 million households, which cannot be monetized further.
In addition, the discontinuation of operations in Russia cost the company 700,000 subscribers. Without this loss, Netflix would have already grown in the last quarter. However, this is still well below expectations, making subscribers less nervous, but more so for contributors.
This is how Netflix wants to interact with it
Going forward, the company plans to “make monetization more effectively from account sharing across households,” which suggests that Netflix will take action against account sharing. Additional fees may apply here soon. Netflix began testing an additional payment for those who share their Netflix account with people outside of their household in March.
In addition to new measures against account sharing, the company is also considering a cheaper ad-supported subscription to mitigate ongoing losses. Other than that, there are still Netflix products that the company will continue to promote in the future, which should also include a live program that viewers can likely vote for.