adminNEW YORK. – After enjoying a long reign as the king of streaming, Netflix faces a tough fight to keep its crown.
It lost almost 1m subscribers between April and July, as the number of people quitting the service accelerated.
But that was not as many as the streaming giant had feared.
Asked what may have stopped subscriptions sliding further, the firm’s chief executive, Reed Hastings, said: “If there was a single thing, we might say ‘Stranger Things.’”
The new season of the hit drama has been a phenomenal success, and may have helped stem the exodus of Netflix customers.
The company reported its first subscriber loss since 2011 in April, news that was followed by hundreds of job cuts and a sharp drop in its share price.
Rivals are challenging its dominance, while price hikes have taken a toll.
The subscriber losses reported on Tuesday were the biggest in the firm’s history, with the US and Canada home to the highest number of cancellations in the quarter, followed by Europe.
Guy Bisson, executive director at Ampere Analysis, said it was “inevitable” that Netflix would start to see its grip on the market loosen.
“When you’re the leader, there’s only one direction to go, especially when a large amount of competition launches, which is what Netflix has seen in the last couple of years,” he said.
It is a stark change for Netflix, which enjoyed years of seemingly unstoppable growth, as it revolutionised the way people around the world consumed entertainment.
Its position as a global behemoth was cemented when the pandemic hit in 2020 and people, stuck at home with few other options for entertainment, flocked to monster hits like Squid Game and The Crown.
But as pre-pandemic habits return, Netflix has struggled to attract new sign-ups – and maintain the loyalty of existing members, especially as the cost of living crisis leads to belt tightening.
The company also faces fierce competition from the likes of Apple TV, HBO Max, Amazon Prime and Disney+. Netflix was once the disruptor, making video rental stores like Blockbuster redundant. But the disruptor is fast becoming the disrupted.
Netflix’s move to ma A “standard” plan in the US – which allows people in the same home to watch on two devices simultaneously – now costs US$15.49, up from US$14 in January and just US$11 in 2019.
In the UK, basic and standard plans have both increased since January by £1 a month to £6.99 and £10.99 respectively.
“At some point, yes, they’re going to reach a threshold where a significant number of people say enough is enough,” Mr Bisson said. “Because of the additional choice… price hikes are a more risky strategy.”
For now, surveys suggest that Netflix is managing to lure back a higher share of deserters than its rivals. Many households also continue to identify it as the streaming option they would retain if forced to have only one.
In all, the company had roughly 220 million subscribers at the end of June – still well north of its closest competition.
But the company, long accustomed to posting double digit growth, is grappling with its most serious slowdown in years, with revenue in the April-June quarter of US$7.9bn, up just 8.6 percent year-on-year.
The firm’s share price has dropped more than 60 percent so far this year, as investors sour on its prospects.
“Netflix’s subscriber loss was expected but it remains a sore point for a company that is wholly dependent on subscription revenue from consumers,” said Insider Intelligence analyst Ross Benes.
“Netflix is still the leader in video streaming but unless it finds more franchises that resonate widely, it will eventually struggle to stay ahead of competitors that are after its crown.”
Shares climbed more than 7 percent in after-hours trade on relief that the losses were not larger. – BBC.
Online Reporter