Since January 200 thousand fewer subscribers and -22.5% on Wall Street. Among the reasons, the end of the lockdown and increasingly fierce competition: the American company is thinking of advertising
The largest company for film, television and online content distribution seems to have come to its own first setback. After a glorious decade it has brought Netflix to reach the coveted share of 222 million subscribers around the world, it is now facing its first moment of crisis in a 2022 that has started very badly for the US giant. In the first quarter 200 thousand fewer subscribers it’s a vertical collapse of the stock on Wall Street by 22.5%. Numbers that overturn the most optimistic forecasts and that are a prelude to an even greater loss of subscribers in the next few monthsthe. At the moment the streaming platform has communicated that the slowdown is mainly due to the suspension of service in Russiabecause of conflict in Ukrainein addition to difficulty in reaching new subscribers. At the Californian headquarters of The catsthe leaders, however, are well aware that what could have been a physiological slowdown, after presenting its first series in 2013, House of Cards and published approx 126 original series and movies in 2016with a market capitalization that reached i 138 billion euroscould now be the beginning of a much darker period than the happy recent years.
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The forecast: 2 million fewer subscribers in 2022
For the first time since its birth (1997) Netflix is losing users rather than gaining them. The communication of the results of the first quarter of 2022 to the shareholders, as required by the American legislation on listed companies, immediately caused an impact on the stock exchange, since in the past months much more optimistic expectations had been announced, with a expected growth of 2.5 million subscribers before the end of the year. We must not refer to the unpredictable conflict, which led to the renunciation of 700 thousand subscribers in Russia, but to the result of United States and Canadawhere the loss was 600 thousand subscribers. A statistic that suggests that the situation should not improve in the short term, but worsen further, with the estimates revised with a forecast that could be that of the loss of 2 million subscribers in 2022.
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The cause
In spite of the ongoing war, i There are four reasons for this crisis, some linked together. The increase of the price of subscriptionsyes perhaps the most concrete and immediate, because not all have accepted or could have accepted the increase. The economic difficulties of many have resulted in the renunciation of the service since current circumstances, compared to a few years ago, offer alternative solutions to Netflix. Pandemic and lockdown had inevitably increased the number of members, but in recent months people have been less tied to the domestic reality with the fading of the health emergency, dedicating themselves to other things in their free time. Likewise, the emergence of platforms such as Disney+ e Amazon Prime Video, gave users a choice. In both cases the cost of the subscription is much lower (8.99 euros per month or 89.99 per year for Disney +, only 36 euros per year for Prime, whose subscription also includes free shipping for ecommerce) against an increasingly rich and enriched offer. Strong competitors backed by equally large realities are crumbling the monopoly that had characterized Netflix in the last decade. Last but not least, the practice of widespread abusive sharingwhich makes of 222 million official subscribers over 320 million active content users. According to these numbers, one in three users would be “latching”, due to the sharing of a subscriber’s personal credentials with friends, relatives and acquaintances. A phenomenon to which the company has started to put a stop to it only recently.
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Netflix’s counter-moves to recover subscribers
These reasons, all combined, have inexorably caused a halt to the growth of Netflix, which is now working to give life to an immediate and timely reaction (also probing more deeply the reaction of users with the introduction of new icons, such as that of the double thumb). Reiterate success and records in the first 28 days of programming content such as Squid Game (142 million users), Bridgerton (82 million) e The Witcher (76 million), currently appears very difficult. In some cases, give users the opportunity to change the ending of a series obviously it is not enough, while the solution that is the most popular, also for the reduction of the cost of subscriptions, would be that of introduce advertising. The same co-founder and CEO of the streaming giant said so Reed Hastingsperhaps explaining the opportunity to enjoy the contents at lower prices, if you accept the advertisements. At the moment the cost range is from 7.99 to 17.99 euros per month, depending on the profiles that can be activated and the devices that can be used at the same time, but new solutions could arrive over the course of the year. It would not be the first case of commercials within streaming content, because in Italy Pluto Tv (free thanks to advertising) e Chili with the offer of some free films, they have always given space to promotional ads. The spread of the platform in many countries also gives a glimpse of the possibility of producing and distributing increasingly personalized content, specific according to geographic areas, but such an eventuality would certainly not be without additional costs. Finally, children aged 14 to 25 invest most of their time with videogames and watching playful content on TikTok, Twitch e YouTube. Netflix has already created a section reserved for gameswithout asking for an additional cost, but the effectiveness of this choice in terms of subscriptions has yet to be tested.
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April 20, 2022 (change April 20, 2022 | 12:07 pm)
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