There are quite a few reasons why Netflix is shrinking – for the first time in a decade. But she already has action plans
Photo: Giktiim
At the beginning of January, Netflix raised the prices of its streaming service for the umpteenth time. Now, the bill comes: Netflix last night (Tuesday) released its first quarterly report for 2022, and for the first time in a decade it was forced to announce: Users are leaving us, and it’s going to get worse soon.
The next quarter is going to be even more dramatic
According to the report and letter to Netflix investors, it ended the first quarter of 2022 with a loss of 200,000 users worldwide compared to the last quarter of 2021. In the United States and Canada, where price increases began, Netflix reports 600,000 customers canceling their subscription And claims “the main reason for this is the rise in prices, which is in line with our expectations.” Before the detractors open champagne, it still closes the quarter with 222 million subscribers, leaving it with the title of Queen of Streaming. And if you think that Netflix is going to lower its prices, it is worth noting that it notes that the overall effect of the price increase was very positive on its revenue.
According to Netflix’s forecasts, the worst is yet to come, and it could lose up to 2 million subscribers in the second quarter of 2022. But Netflix is not only blaming price hikes for abandonment: in March Netflix announced it was joining a boycott of Russia and suspending its service to Russian customers. As a result of that decision, the report said, it had lost 700,000 Russian subscribers.
Plus, you guessed it, Netflix continues to argue that sharing accounts is hampering its growth in quite a few markets. It is estimated that about 100 million households around the world share passwords in a manner contrary to Netflix’s policy, which is almost half of its subscriptions. That is, if you and your parents who live in a completely different house want to watch Netflix, each of you should purchase your own subscription, and not share the password with the ex, your ex-roommates or your siblings who live in another city. Netflix is doing quite a bit of experimentation to stop the phenomenon of account sharing, and it has only recently been reported that it requires additional payment for shared accounts, so far only in South America – but do not be surprised if it reaches the whole world.
Finally, Netflix raises the classic argument of the past two years and Blame it on the Covid, claiming that in 2020 it experienced significant growth that misled it into thinking it was the reason for the slowdown in the number of subscriptions in 2021 – now it knows why. Following the publication of the report and the investors’ call, Netflix’s stock plummeted in the post-trading hours by 25%.
What next?
Obviously, Netflix does not say desperate, claiming that it plans to “improve all aspects of Netflix – and especially the quality of its programs and recommendations.” It also focuses its efforts on markets outside its home market, the United States, as “in the long run, a significant portion of our growth will come from outside the United States.” Here, too, the reason is clear: the American market is flooded with various and weird streaming services, and while Netflix continues to raise its prices, Disney Plus for example has launched a discounted program with commercials. Although Disney is still far from Netflix when it has 130 million users (as of the end of 2021), it is still before its big global launch that will take place in June, and among other things will bring Disney + to Israel as well.
A good old age
Born with a joystick in hand. He has far too many gadgets and far too little free time to play with them all. An unexplained hammer holder for calibrating device batteries. When he’s not busy writing about technology, he likes to talk about it, and a lot
