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Netflix loses nearly 1 million subscribers

Los Gatos, CA — After enjoying a long reign as King of Streaming, Netflix faces a tough battle to maintain its crown.

Almost one million subscribers were lost between April and July as the number of people quitting the service accelerated.

But that wasn’t as much as the streaming giants were afraid of.

When asked why subscriptions stopped sliding further, Reed Hastings, CEO of the company, said, “If there’s one thing, I might say’Stranger Things’.” rice field.

The new season of hit dramas has been incredibly successful and could have helped stop the outflow of Netflix customers.

The company reported its first subscriber loss since April 2011, followed by hundreds of headcount reductions and a plunge in stock prices.

Rivals are trying to dominate it, but price increases are at the expense.

Subscriber losses reported on Tuesday were the largest in the company’s history, with the United States and Canada having the highest number of cancellations this quarter, followed by Europe.

Guy Bisson, executive director of Ampere Analysis, said Netflix is ​​”unavoidable” to start loosening its grip on the market.

“When you’re a leader, especially when a lot of competition begins, there’s only one direction to go, which Netflix has seen in the last few years,” he said.

This is a big change for Netflix, which has grown unstoppably over the years as it has revolutionized the way people around the world consume entertainment.

Its position as a global giant became solid when the pandemic broke out in 2020, with people staying home with few other entertainment options and flocking to monster hits such as squid games and The Crown. rice field.

However, as pre-pandemic habits revived, Netflix struggled to attract new subscribers, especially as the cost of living crisis led to a tightening of the belt, maintaining the loyalty of existing members.

The company also faces fierce competition with Apple TV, HBO Max, Amazon Prime, Disney + and more. Netflix was once confusing and made video rental stores like Blockbuster redundant. But the destroyers are rapidly becoming confused.

The move to make Netflix’s services more expensive has also put off some customers.

The US “standard” plan, which allows people in the same house to watch on two devices at the same time, has gone from $ 14 in January to just $ 11 in 2019 to $ 15.49.

In the UK, both the basic and standard plans increased by £ 1 per month from January to £ 6.99 and £ 10.99, respectively.

“At some point, yes, they will reach the threshold that quite a few people are good enough,” Bisson said. “Because of the additional options … Price increases are a more risky strategy.”

So far, research has shown that Netflix has been able to bring back a higher share of breakouts than its rivals. Many households also continue to identify it as a streaming option to keep if forced to have only one.

Overall, the company had about 220 million subscribers at the end of June, far north of its closest competitor.

However, the company, which has long been accustomed to recording double-digit growth, saw its April-June quarterly sales increase 8.6% year-on-year to $ 7.9 billion, the most serious slowdown in the last few years. It is working.

The company’s share price has fallen by more than 60% so far this year as investors struggle with that outlook.

“The loss of Netflix subscribers was expected, but it’s still a pain for companies that are completely dependent on consumer subscription revenue,” said Ross Benesse, an insider intelligence analyst.

“Netflix is ​​still a leader in video streaming, but unless we find more franchises that resonate widely, we’ll eventually struggle to stay ahead of the competitors chasing its crown.”

Stocks rose more than 7% in after-hours trading due to the relief that the losses were not significant. The company warned that it could lose as many as 2 million subscribers.

Netflix says it will accelerate growth with new ad support services and curbing password sharing. According to one study, Netflix’s annual cost was $ 6 billion.

In some Latin American countries, account sharing is already expensive. I would like to duplicate this model all over the world.

However, the company has been aware of password sharing issues for years and has not been able to find a solution so far.

“I was encouraged by the early learning in Latin America and the ability to convert consumers to paid sharing,” the company said in a shareholder update.

It said it expects cheaper and more ad-supporting options to start in early 2023, starting with “a small number of markets where advertising costs are important.”

“Like most of our new initiatives, our intention is to deploy, listen, learn, and quickly iterate to improve our offerings,” the company said.

According to Bisson, the advertising service could attract both existing customers who tend to cancel price increases and new households who hesitate to subscribe.

He added that Netflix should be able to earn as much or more per user as it did by relying on subscriptions.

“Assuming they understand it correctly-and by understanding it I mean price … and the amount of advertising in it-and that’s a potentially powerful strategic move for them. “He said.

But he said Netflix’s most important task is to ensure strong material that people can watch.

For example, new registrations in the United States come from an increasingly older crowd with different tastes than the younger audiences who were early streaming conversions.

“As they are increasingly competing for their generalist audience, the range of content they need is much wider, and I think that’s why people say,’I have a lot of things I hate right now.'” Said Mr. Bison. “It’s a huge challenge.”

Eric Steinberg of WhipMedia said Netflix needs “more frequent hits” and added that Netflix has room to experiment with staggered releases to retain subscribers.

The company is already in that direction with the release of Stranger Things’ fourth season episodes in two batches this year, but “it’s under pressure,” he said.

“They no longer have their own sandbox,” he said. “Inflationary environment and great programming like we are [at the competition], People are trying to reassess the amount they are willing to pay. — BBC

https://saudigazette.com.sa/article/623112/BUSINESS/Netflix-loses-almost-a-million-subscribers?ref=rss&format=simple&link=link Netflix loses nearly 1 million subscribers

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