Is Netflix in decline or will the streaming giant prevail?

For the second consecutive quarter in 2022, with the stock price falling after the first quarter announcement, Netflix reported a drop in subscriber growth. It is only the second time in history that this has happened to the streaming giant and reflects a trend that must be stopped.

With a global total of almost 221 million subscribers, Netflix remains the largest streaming service in the world. His loss of 970,000 subscribers in the second quarter was less than the two million he had projected, and the share price rose slightly again. So while it can’t be called a crisis yet, there are plenty of historical examples showing that Netflix needs to move quickly to make some changes to its business model.

Kodak, Blockbuster, BlackBerry and Yahoo! These are just a few examples of dominant brands that failed to be nimble and responsive to global change, and thus paid a heavy price. And now, with Amazon Prime hitting the 200 million subscriber mark for the first time, Netflix is ​​in real danger of ceasing to be the global streaming leader, even if the phrase “Amazon Prime and chill” doesn’t quite mean the same thing. sounds like that.

The reality is that, in the near future, Amazon Prime could easily overtake Netflix. Disney+, which currently has 152.1 million subscribers, also poses a real threat. Although Netflix was the first streaming service to scale and initially had no real competition, that has changed dramatically in recent years. Amazon Prime and Disney+ may be newer to the streaming scene, but both companies have deep pockets and extremely diversified portfolios of both content and businesses.

Behemoth in decline

netflix in decline pic1

There are a number of reasons for Netflix’s recent decline, the first of which can be attributed to the depletion of top-tier content. To some extent, many subscribers have now seen everything they had been looking for and therefore need to receive the next blockbuster or have the back catalog resold to them.

In terms of big blockbusters, the time between water cooler moments (or the Zoom equivalent) has gotten longer. Squid Game was something of a surprise hit hit by Netflix that provided a short-lived boost.

Along with the content saturation point has come a post-COVID-19 financial rationalization by many streamers. Having added other streaming services alongside Netflix during lockdowns, the need for disposable income has increased as life has opened up again. So financial pressures have forced some consumers to choose between streaming services, and for parents, Disney+ may take precedence for the first time. On top of that, sharing passwords between family and friends has become a problem for Netflix and other streaming platforms.

See also  ATLAS Space: A 'Netflix' for Satellite Ground Operations Software

But let’s not forget that Netflix built its empire on an agile and flexible culture, so if any company can react to market conditions, it’s probably Netflix. It has already announced measures to counter the most pressing concerns.

New Netflix Options

netflix in decline pic2

In a bid to start attracting new subscribers, or retain subscribers who are really struggling to pay for Netflix as a discretionary purchase, the streaming giant is set to introduce a lower-cost product backed by ad revenue. In many ways, it’s like the gradation of Spotify accounts you can sign up for. Netflix has already partnered with Microsoft on the ad-supported model.

“We will likely start in a handful of markets where ad spending is significant,” the company said in its most recent letter to shareholders. “Like most of our new initiatives, our intention is to implement it, listen and learn, and quickly iterate to improve the offering. So our advertising business in a few years is probably going to look a lot different than it did on day one.”

Netflix is ​​certainly saying all the right things about its ability to be nimble. The company also revealed that it is in the early stages of rolling out a test to share plans for family members living in different residences. Very much an ‘if you can’t beat ’em, join ’em’ strategy, it’s aimed at monetizing something that’s already happening.

Sharing passwords between family and friends can become legitimate, with an incremental payout to eliminate the guilt, the hassle, and, well, breaking the law. The test of this will be implemented in Latin America as a starting point. “We have now had more time to understand these issues, as well as how best to address them,” the company says.

See also  John McAfee Netflix Documentary Attacked By Those In It

game on

Netflix is ​​also focused on boosting its online gaming offerings, with the ultimate goal of establishing the platform as a one-stop entertainment destination. Additionally, the company recently announced the acquisition of Animal Logic, the award-winning animation studio behind Hollywood blockbusters, including Happy Feet, legend of the guardians: The Owls of Ga’Hoole, the lego movie franchise and peter rabbit.

“Animal Logic is a leading animation studio with innovative technology that will strengthen our existing business and increase our long-term capability in the animation space so we can better entertain our members around the world,” says Amy Reinhard, vice president of Animal Logic. Netflix studio. Operations.

Whether Netflix can maintain its position as the world leader in streaming remains to be seen, but perhaps co-existing with Amazon Prime and Disney+ at around the 200 million subscriber mark isn’t really a bad place to be. The real question is whether the current decline will continue and while Netflix appears nimble and nimble, only time will tell if it can change and adapt quickly enough.

Leave a Comment