The popularity of the streaming giant Netflix worldwide has been the admiration of many competitors eyeing a piece of the pie. However, the recent announcement that the company lost 200,000 subscribers in the first quarter of 2022 spells doom in the days ahead.
Netflix’s greatest days as the leading streaming network seems seriously challenged by its decision to increase subscription fees over the years. Pocket-friendly pricing and a voluminous, carefully selected library were the most endearing factors that helped Netflix to reap big. For a long time, the streaming guru maintained a subscription fee of $7.99 per month. It has since doubled to $15.49, making it the most expensive in comparison to others, such as HBO at $15. Its friendly prices were once the industry’s best value for money considering the quality of entertainment subscribers accessed.
For any business, hiking prices over time is inevitable, but this has become Netflix’s Achilles heel.
“It’s gotten to the point where each new increase is steadily angering even the most loyal Netflix subscriber. Especially now, in a time of economic uncertainty, the last thing anyone wanted to see was the price of their Netflix subscription going up again. Netflix really stepped on its own foot in this regard.” Writes Michael Kennedy for movie review website ScreenRant.com.
Netflix lost 200K subscribers in Q1 😭 pic.twitter.com/Jalw1U3aGv
— N.Kanali (@NicKanali) April 20, 2022
How Netflix plans to reverse this trend remains a question of master calculation and business genius. The company invented a business model that has worked well for the last decade but could face sustainability challenges amidst simmering competition and password-sharing practices.
Whereas the company previously encouraged password sharing and said that the model could have added to the growth of its subscribers. It now sees this as a threat to the growth of subscribers and wants to explore other revenue channels such as ad-supported content.
A 2019 study hinted that the network’s library had shrunk by 40% since 2014, and things could have gotten worse by 2022. Netflix had banked on its evergreen original TV series, movies, and documentaries but competitors such as Amazon, Apple and Disney cast their nets wider by including news, sports, and light entertainment.
The tech-savvy company has re-invent and innovate to turn around. The announcement of its failing subscriber numbers caused a 35 per cent stock price drop. The company says it might lose more than two million subscribers in the next three months.