For the first time in a decade, Netflix are losing subscribers. They’ve recently put their prices up yet again and this could be playing a huge part in why their numbers are dropping. With the constant rise in cost of living, people can’t afford the increase in Netflix pricing too. This has seen them lose a large amount of their regular subscriptions.
Netflix took a huge loss within the first quarter of 2022. The company can only hope the rest of the year doesn’t follow along the same path. It seems if they want to turn things around though, they may need to make some changes, and fast. They have reported a loss of 200,000 subscribers globally. This is compared to the final quarter of 2021. In just a few months they have declined rapidly. It’s even been estimated that they may lose a further 2 million subscribers within the second portion of the year.
“Our revenue growth has slowed considerably,”Netflix
Within their letter to shareholders they stated that their revenue isn’t what it was before. It seems with the pandemic and everyone staying inside more, their numbers drastically increased. With things heading back to normal slowly, people have found they don’t need all services they once used. Netflix are using this as their reasoning for why numbers are on the decline. However, it seems that the money aspect is playing a huge part also.
In January 2022, Netflix announced a price increase. While this may have been the first time within two years that their prices were put up, many found it too much. When a company increases prices they can expect to see some loss. Customers are likely already stretching themselves to pay for these luxuries. So, with an increase they simply can’t justify it any more. Countries like America also have multiple options when it comes to streaming sites, Netflix need to be able to compete.
The price increase saw them lose 600,000 customers across America and Canada alone. Also, with the withdrawal of their service from Russia, they lost another 700,000. However, thanks to their sign-ups it balances out to a loss of 200,000 overall rather than the extremely staggering figures. Still not ideal, but it’s better than it could have been. By withdrawing their services from Russia, they knew they would make a massive loss, so this is just part of that process.
The company have previously stated they will be making changes to password sharing. It seems they want to encourage more people to sign up, rather than using an account that has already been created. Unfortunately, it doesn’t seem this will go in their favour. Currently, they’ve estimated more than 100 million households are using their services via password sharing. Taking that option away could force people to sign up for their own account. However, it is likely that entire households will unsubscribe instead due to only being able to justify one payment.
Services like Disney Plus have stated they’ll be offering a lower-cost ad service later this year. Meaning those who can’t handle their recent price increase will still be able to stream Disney films, but with adverts as opposed to their current service which comes without. This sets them apart from Netflix again. It becomes harder for Netflix to compete. It’s no wonder they have seen a decline with their service. They were once able to offer such a low cost because all of their movies and shows were outsourced. With Netflix now offering their own films and series, their cost has become much higher. Meaning they can no longer justify such low prices.