Netflix has gone in a short time from being one of those companies that is revered as a disruptor for having changed a business model as important as television and audiovisual distribution to, now, it seems that everyone wants to make firewood from the fallen tree .
The company started the year 2022 strong, but towards the side that should not. In the first quarter, the streaming giant reported losing 200,000 subscribers, marking the first time it had lost subscribers in more than 10 years. On top of that, Netflix expects lose another 2 million subscribers more in the second quarter of 2022, data that will be confirmed or not soon.
The truth is that since Netflix announced a little over a month ago its first drop in the number of global subscribers, the reactions have not stopped. To a large extent, due to the nervousness of investors, with shares that have plummeted almost 70% so far this year.
But before we continue to dig into his wounds, let’s get one thing straight: Netflix is still the industry leader. With a weak situation due to its way of making accounts and content, reinvesting all its income, but growing health in developing countries. With this caveat, let’s proceed.
ANDThe last swerve that Netflix has given since the bad news for the Red Giant began has been to confirm that there will be a cheap subscription with ads. The price and date are still unknown, but Ted Sarandos, co-CEO, made it clear this week.
The announcement comes after another bad news. According to a report from Information, more and more long-term Netflix subscribers are unsubscribing. A clear sign that the competition, the new people in the room, is attracting more attention. Survey data consulted by the outlet reveals that subscribers who have been on the service for more than three years accounted for 13% of cancellations in the first quarter of 2022.
As the number of cancellations has generally grown, Information reports that new users are representing a smaller part of them, another indicator that Netflix is struggling to retain users for longer periods. In the second quarter of 2021, people surveyed who subscribed to the platform for less than a year accounted for 70% of cancellations, while long-term subscribers accounted for six percent. 60% of cancellations were made by new subscribers last quarter.
Another response that it carried out to stop the bleeding was a test to combat account sharing by charging an extra of about 2/3 dollars at the exchange rate in Chile, Costa Rica and Peru.
The test did not go well. AApparently, the notification that the application sent to account holders served as a reminder in some cases they were paying and not enjoying it too much, leading to more casualties.
A survey conducted by Time2Play in Spain it left a similar feeling about how willing current users are to pay more to continue sharing their passwords.
In total, 54% of the Spaniards surveyed use someone else’s Netflix. Of this total, 84% said they would not pay for their own subscription if Netflix banned account sharing. So now that the company has announced that it will charge for multiple profiles, it may be facing losing even more users, at least in Spain.
In fact, many people who now have their own account and share it with someone else may opt out if they need to stop splitting expenses.
According to the survey, of that 46% who pay for their own subscription, 67% share the account with friends or family. We might think that they still do it to get something in return, but it turns out that they do it out of sheer generosity: only 30% ask that they return the favor by giving them access to another streaming service.
On average, in Spain the Netflix account is shared with 2.9 peoplean average higher than other countries where we have carried out a similar study: 2.3 in the US and 2.7 in Italy.
The other avenues besides ads: bet on sports or change your premiere model
Now, given that these changes of direction at the moment do not seem to be working, What options could Netflix handle in the medium term?
A first option could be to break with its current policy of ordering complete series, going back to the pilot model. This is something that already seems to have been raised internally at the time. “If you’re a typical studio, you get money for a pilot, and if it tests well, you pick up the series, maybe do a few more episodes, and wait for the ratings,” said Barry Enderwick, who worked in Netflix’s marketing department. from 2001 to 2012 and who was director of global marketing and subscriber acquisition, to which CNBC in 2018.
“At Netflix, our data made our decisions for us, so we only asked for two seasons. Show creators were asking us, ‘Do you want to see notes? Don’t you want to see a pilot?’ And we answered: ‘If you want us to do it’. The creators were left speechless.”
Ordering projects directly from the series gave the writers and producers security andoften more money. The downside, according to Netflix, is that it has also spawned series that haven’t turned out to be very good.
Related to this, another possible decision could be to end its premiere policy followed by all episodes, something that in part has already begun to do with its ‘parts’ in which you divided, for example The Money Heist either stranger things.
“There’s no reason to release it weekly,” co-CEO Ted Sarandos said in 2016.. “The move away from calendared TV is huge. So why are you going to drag people back to something they’re ditching in huge numbers?”
Still, in recent years, Netflix has experimented with weekly releases for some reality shows instead of mass releases. So far, this has not been extended to streaming scripts.
Live sports: the next frontier of streaming
With Amazon Prime Video and Apple TV+ already snapping up US sports broadcast rights, it’s clear that sports is another important area to address.
Netflix has long refused to bid on live sports, a staple of legacy media companies. Last year, however, Hastings said that Netflix will consider bidding for the rights to Formula 1 live to match them with the success of their documentary series Drive to Survivewhich profiles each racing season.
“A few years ago the rights to Formula 1 were sold”Hastings told the German magazine Der Spiegel in September. “At that time we were not among the bidders, today we would think about it.”
The addition of live sports may give Netflix a new audience base, but it runs counter to Netflix’s recent reluctance to spend a lot of money on highly licensed programming.
We will see what the Netflix of the future is like, a player that, despite the push of the competition, it should be remembered again that it continues to be the leader by number of users.