Still wondering why Netflix saw such a dramatic drop in subscribers?
On April, 2022, the streaming giant shocked Wall Street and its shareholders when it announced a 200,000 subscriber drop as part of its first-quarter earnings report. While that number may not seem large compared to the total 222 million paying customers it still has, this is the first time in about a decade that Netflix has seen a loss of subscribers. Additionally, the company projects it will lose 2 million more subscribers in Q2.
Reportedly, several factors contributed to the company’s growing cancellations, including pandemic production stoppages, a price increase, and the fact there are simply so many competitors vying for customers’ streaming bucks, these days.
Here are five reasons for the Netflix’s subscribers loss:
JANUARY HIKE IN PRICE
Following Netflix’s rate hike on all subscriber tiers in January, with basic plans now going for $9.99 a month and a top tier of $19.99, the streaming giant saw a gigantic jump in cancellations. Antenna data shows that 3.6 million people canceled their Netflix service in Q1 2022, a full 1 million more than both Q1 2021 and Q4 2021. Churn increased 0.95 points month-over-month in January, according to Antenna. By the end of March, Netflix’s active monthly churn rate was 3.3%, slightly less than the 3.6% spike in cancellations in September 2020 caused by controversy over the film, “Cuties.”
NO NEW SUBSCRIBERS
According to Similarweb’s insights report on Netflix web traffic data, cancellations outpaced sign-ups in Q1 2022. Global sign-ups declined 16% in the first quarter, while cancellations were up 61% in March. Netflix’s percentage of new users is down from two years ago and it has the lowest percentage of new average unique visitors among its competitors, indicating that Netflix could struggle with subscription growth moving forward. There was, however, a slight Oscars sign-up bump in late March as viewers checked out nominated films “Don’t Look Up” and “The Power of the Dog.”
Like dozens of media companies, Netflix announced on March 6 that it was suspending service in Russia in protest of the war in Ukraine. According to Bloomberg, Netflix stood to lose between 100,000 and 1 million subscribers from the decision. Even if they hadn’t ended service for Russians, they would have had trouble receiving payments as Visa, Mastercard and American Express also suspended business in Russia. The streamer launched in Russia in 2016.
COMPETITION GETTING TOUGHER BUT CHEAPER
With newer streaming services including Apple TV+ and Paramount+, the exclusive home of Tyler Sheridan’s “Yellowstone” spin-off “1883,” Netflix faces more intense competition than ever for subscribers. And budget-conscious households are increasingly turning to free ad-supported streaming services (FAST) for their entertainment fix. During Tuesday’s earnings announcement, Netflix Co-CEO Reed Hastings said that the company is looking into launching their own lower-priced, ad-supported tier, so that it can compete for affordability. As Forbes pointed out, almost every other streaming site costs less than Netflix per month. And some of the buzziest shows of 2022 so far, including “Severance,” “Roar,” and “Slow Horses,” are on Apple TV+, not Netflix.
PURPORTED PASSWORD SHARING
Well, Netflix has announced plans to crackdown on subscribers who share their account with friends and family who don’t live in the same household, a move that could have engendered existing subscribers’ apathy, eventually causing them to cancel.
The rate with which consumers cancel their subscriptions have become so disturbing. Over 200k subscribers’ loss in just three months? Netflix needs to walk a fine line like the saying, “innovate or quench.”
Credibility and transparency is our DNA at Prime Business Africa’. We strongly believe in the role of media as a watchdog of the society that powerfully promotes accountability and transparency in government.
By contributing to Prime Business Africa, you are helping to sustain good journalism and making sure that it remains free to all.