The series and movie streaming platform has lost all the shine it had accumulated in recent years based on new releases and its own productions. The attraction of new subscribers has stopped dead and has just presented some disappointing results that are going to mean a loss of more than 40,000 million dollars in a single trading session.
The corporate health of Netflix is dissolving like a sugar cube quarter after quarter and alarm bells have started to sound at Reed Hastings HQ. The company has just reported results and the most worrying data has to do with the subscriber acquisition which has remained at 8.3 million instead of the 8.5 million that the company itself had forecast. 200,000 fewer customers is not a relevant figure, the problem is in the forecasts for future quarters, which are much more conservative. The streaming platform hopes to add to the first quarter of 2022 around 2.5 million subscribers while a year ago the capture exceeded 4 million. What’s going on? According to Netflix, the most anticipated releases will arrive precisely in this quarter and that is why growth has slowed down, the reality is that competition has increased, the rise in prices does not help and it is likely that many of its original hits have lost freshness in the last months. It should also be borne in mind that the pandemic favored the acquisition of users with the confinements.
Rising prices sustain revenue
On a financial level, the company is in good health thanks to the continuous price increases that it has been undertaking in practically all countries. The company reported a 16% growth reaching 7,710 million dollars, thus meeting Wall Street’s expectations. Earnings per share stood at $1.33, far exceeding forecasts that pointed to a net profit of 0.83 cents per share. The bad news is in the price of the company that touched its all-time highs on November 17, touching almost 700 dollars per share and today it will rise close to 400 dollars, which represents a loss of 40%.
And new climbs in sight
The slowdown in deposits has an antidote at the financial level and goes through charge your customers more for the same service. Last October we already spoke in ADSLZone about the last price increase in Spain and everything indicates that we will soon attend the next one. A few days ago we learned that the company has just announced an increase in its rates in United States and Canada Judging by what happened years ago, it will move to Europe sooner rather than later. American subscribers will pay $15.49 instead of the current $13.99. In Spain, the standard rate of 12.99 euros would cost 15 euros if a similar increase were applied.
Another measure that the company could apply would be the prohibition of sharing the account outside the same household. Currently the premium rate of €17.99 (which would cost 20 euros this year) allows the service to be shared with four screens, but the company wants to prevent friends from paying a single fee and four different households enjoying it. In some countries, warnings have already begun to appear and it could be the prelude to a total ban. In short, difficult times for Netflix, which sees its cake getting smaller and smaller, as competition from Amazon Prime, Disney Plus, HBO or Apple is increasingly fierce. The question is, how long are customers going to put up with price increases? If we extrapolate what has happened in the telecommunications sector, the large operators that were once leaders in capture and were squeezing their customers began to lose subscribers precisely when their capture began to weaken.
