The success of the fourth season of “Stranger Things” has helped the streaming service reduce the exodus of viewers, but the increase in prices, sharing of passwords and competition are challenges for the company.
After enjoying a long reign, Netflix struggles to keep its crown. The platform lost nearly 1 million subscribers between April and July. But the giant of streaming I was afraid of losing more.
Asked what prevented a further decline in subscriptions, the company’s chief executive, Reed Hastings, said: “If there was one thing, we could say it was Stranger things“.
The show’s fourth season was a phenomenal success and may have helped stem the exodus of Netflix customers.
The company reported its first subscriber loss since 2011 in April, news followed by hundreds of job cuts and a steep drop in its share price.
The company is losing subscribers due to the growth of its rivals and the increase in prices for its service.
The loss of new subscribers reported on Tuesday (7/19) was the largest in the company’s history. The United States and Canada lead by number of cancellations, followed by Europe.
Guy Bisson, executive director of Ampere Analysis, said it’s “inevitable” that Netflix will start losing its leading position in the market.
“When you are the leader, there is only one direction to take, especially when there are a lot of competitors on the way, which is what Netflix has seen for the past couple of years,” he said.
This represents a sea change for the company, which has enjoyed years of seemingly unstoppable growth that has revolutionized the way people around the world consume entertainment.
Its position as a global giant was solidified during the pandemic in 2020. It was then that people were stuck at home with few other entertainment options and started watching series like sixth round And The crown.
But as the pandemic faded, Netflix struggled to attract new subscribers, as well as retain existing ones, especially with a near-global crisis of rising cost of living.
The company also faces stiff competition from Apple TV, HBO Max, Amazon Prime, and Disney +.
More “risky” price increases.
Netflix’s decision to raise prices for its service has alienated some subscribers.
A “standard” plan in the US, which allows people from the same family to watch on two devices at the same time, now costs $ 15.49.
In January, that price was 14 USD (75 R $); in 2019, US $ 11 (R $ 59). In Brazil, standard plans cost R $ 32.90.
“At some point, they will reach a threshold where a significant number of people will say ‘enough,'” Bisson said. “Due to the availability of other services on the market, raising prices is a risky strategy.”
Research suggests Netflix is ​​managing to attract back a larger share of subscribers who had canceled the service than its rivals.
Many families also keep saying that if they had to choose just one streaming service to subscribe to, they would opt for Netflix.
At the end of June, the company had around 220 million subscribers, far more than its closest competitor.
But the company, long accustomed to double-digit growth, is facing its strongest slowdown in years, with revenue of $ 7.9 billion from April to June, growth of just $ 8.6 billion. dollars,% over the previous year.
The company’s share price has fallen more than 60% so far this year as investors make pessimistic predictions about its future.
“The loss of Netflix subscribers was expected, but it remains a sore point for a company that relies entirely on its customers’ subscription revenue,” said Ross Benes, an analyst at Insider Intelligence.
“Netflix is ​​still a leader streaming of videos, but unless you find more franchises gaining huge popularity, the company will struggle to keep up with competitors who want its crown. “
Shares rose more than 7% after the results were released, with investors relieved that reported losses were no greater. The company had warned it could lose up to 2 million subscribers.
Netflix said it plans to launch a new plan that contains ads. It also bans the sharing of passwords, which causes Netflix to lose $ 6 billion (R $ 32.7 billion) per year, according to a study.
Netflix is ​​already charging more for account sharing in some Central and South American countries. He hopes to replicate this model around the world. At the shareholders’ conference, the company said it was “encouraged by our early lessons” in Latin America.
The company said it expects its cheapest option, which will contain ads, to launch in early 2023, starting with “a few markets where ad spend is significant.”
“Like most of our new initiatives, our intent is to implement, listen and learn,” says the company.
The advertising plan has the potential to attract both existing customers who are inclined to cancel due to rising prices, as well as new families who hesitate to take out a subscription, Bisson said.
Strong content is the key
“Assuming they got it right – and by that I mean the price and amount of advertising in the plan – it could be a strong strategic move for the company,” Bisson said.
But he said the key task is to ensure Netflix always has strong content that people want to watch, a job that becomes more difficult as the company strives to reach an ever-wider audience.
New subscriptions in the United States, for example, come from an increasingly older audience, with different tastes than younger viewers, who had already embraced streaming when the technology emerged.
“They are competing more and more for this general audience, so the breadth of content needed becomes much greater, which is why I think a lot of people now complain that” there is too much [no catálogo] which I don’t like, ‘”said Bisson.” It’s a very big challenge. “
Netflix needs “more frequent hits,” says Eric Steinberg of Whip Media. He says Netflix might also consider releasing its series for a period of time, rather than entire seasons at once, to keep subscribers on the platform longer.
The company has already taken steps in this direction by releasing episodes of the fourth season of Stranger things in two phases this year, but the competition is tough these days, he said.
“They are no longer alone in this game,” he said. “In an environment of inflation like the one in which we find ourselves and also of excellent planning [nas plataformas rivais]people re-evaluate how much they are willing to pay “.
– Text originally published in https://www.bbc.com/portuguese/geral-62234753
Source: Terra
Emily Jhon is a product and service reviewer at Gossipify, known for her honest evaluations and thorough analysis. With a background in marketing and consumer research, she offers valuable insights to readers. She has been writing for Gossipify for several years and has a degree in Marketing and Consumer Research from the University of Oxford.
