During its recent quarterly earnings report earlier this week, Netflix revealed that they had lost 200,000 subscribers during the first three months of the year. This news caused its shares to plummet almost 40% too as users and shareholders worry that they’re beginning to decline. It’s likely going to get worse for Netflix too, with themselves predicting that they’ll lose another 2 million subscribers in the second quarter of the year.
They lost the most users in US and Canada, with smaller losses in the Middle East and Africa as well as Latin America. Interestingly, they still had a very minor increase in subscriber count in the Asian Pacific region. However, perhaps the biggest single major reason for the drop in paid users was Netflix’s decision to pull out of Russia. This led to a loss of 700,000 Russian users.
As Netflix writes in its Q1 2022 letter to its shareholders, another significant problem it’s facing is password sharing. The streaming service believes that there’s at least 100 million users that use accounts they don’t pay for, and their priority is to monetise that group of people.
“Another focus is how best to montise sharing—the 100M+ households using another household’s account. This is a big opportunity as these households are already watching Netflix and enjoying our service. Sharing likely helped fuel our growth by getting more people using and enjoying Netflix. And we’ve always tried to make sharing within a member’s household easy… While these have been very popular, they’ve created confusion about when and how Netflix can be shared with other households,” – Netflix Q1 2022 letter to shareholders
In a bid to fight back these subscriber losses and target those who are using another user’s account, it seems as though Netflix will be planning a new subscription tier for its streaming services that will be cheaper compared to what it currently offers, but with ads in it. According to Netflix CEO Reed Hastings during its quarterly earnings call, despite he himself being against the ‘complexity of advertising’, he wants to give consumers a choice. Netflix users who are more advertising-tolerant will thus be able to use Netflix at a lower price, getting what they want at what they’re willing to pay for.
There’s also some other ways Netflix is looking at monetising users who have been hopping on other accounts. Netflix is already trialing a new feature in some Latin American regions where users can add ‘sub accounts’ for up to two other users outside of their household. These sub users then pay for their accounts at lower prices. Greg Peters, Netflix chief operating officer, also mentioned that they’re likely rolling this out to the rest of the world within a year’s time.
It pretty much seems as though Netflix has rediscovered old school network television. In fact, the whole streaming scene is starting to get just as fragmented as television was back in the day. Netflix is no longer the ‘be all and end all’ streaming service it once was, with plenty of other streaming services offering just as much if not more options to watch such as Disney+ Hotstar and HBO GO, while other Asian-oriented choices exist here too like iQiyi, TVBAnywhere+ and iFlix.
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