Netflix Subscriber Numbers Keep Going Down: Trouble On The Horizon?

The video-streaming giant says everything is okay and better days are ahead, but the numbers don’t lie.
(credit: Malay Mail/pinnacleanimates/Freepik)

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The streaming market is getting quite crowded nowadays. You have Apple TV+, Disney+, HBO GO, Amazon Prime and many others. Back then, Netflix used to be the only choice for all. Now? Not anymore.

In a news report by the New Straits Times, as the streaming juggernaut battles intense competition and viewers tightening their purse strings, NETFLIX reported losing subscribers for the second consecutive quarter. However, the company reassured investors that brighter days were coming.

Netflix had just under 221 million subscribers after the most recent quarter, which was less than anticipated given the loss of 970,000 paid customers.

In a presentation of earnings, the head of the company said:

Tough in some ways, losing a million and calling it success, but really we are set up very well for the next year.

Netflix, Co-chief and Founder, Reed Hastings

In its financial report, the company stated that it had forecast a million new paying members for the current quarter.

After-market trades for Netflix shares saw a small increase, indicating that investors were still sticking behind the company.

Analysts highlighted that the results were alarming even though they were not as bad as anticipated.

Netflix’s subscriber loss was expected but it remains a sore point for a company that is wholly dependent on subscription revenue from consumers. Unless it finds more franchises that resonate widely, it will eventually struggle to stay ahead of competitors that are after its crown.

Analyst, Ross Benes

A number of people are able to access the platform’s material without having to pay, but Netflix executives have made it plain that the company will crack down on the sharing of logins and passwords.

It’s great that our members love Netflix movies and TV shows so much they want to share them more broadly. But today’s widespread account sharing between households undermines our long term ability to invest in and improve our service.

 Netflix, Director of Product Innovation, Chengyi Long

In March, Netflix started testing a “add a house” membership service in Chile, Costa Rica, and Peru. According to Long, this feature will soon be made available in Argentina, the Dominican Republic, Honduras, El Salvador, and Guatemala.

By the end of the year, according to Netflix, a widespread implementation of an account-sharing payment system is planned.

According to The New York Times, Netflix is collaborating with Microsoft to introduce a less expensive subscription option that includes advertisements by the end of this year.

After a disastrous first quarter in which it lost customers for the first time in a decade and after years of opposition to the whole idea of showing commercials, Netflix decided to build the more affordable service.

Microsoft will be in charge of creating and overseeing the platform used by marketers to deliver advertisements to Netflix subscribers.

These earning results buy them time, and they need time to focus on stopping the bleeding. Netflix is facing a significant amount of competition; to hold on as well as they have is an example of how resilient they are but they are not out of the woods.

Enderle Group, Analyst, Rob Enderle

In order to compete with Disney and other formidable rivals like them who own the Marvel and Star Wars brands, Netflix has been heavily investing in original programming, like the popular shows “Squid Game” and “Stranger Things.”

According to the company, the recently released fourth season of “Stranger Things” has the most English language television viewers ever on Netflix with 1.3 billion hours of viewing in just four weeks.

According to executives, the most recent season of “The Umbrella Academy” was watched for almost 284 million hours.

Netflix co-chief Ted Sarandos said at the earnings presentation, the action-thriller movie “The Gray Man,” based on the same-named novel, is “mind-blowing” and will be available on Netflix on Friday.

Netflix’s ability to produce smash hit content is undoubted. However, with the loss of almost one million members since the prior quarter, translating this into commercial success is proving to be more of a challenge.

GlobalData, Managing Director, Neil Saunders

Changes in behaviour are one of Netflix’s challenges as housebound individuals who signed up for the service at the height of the pandemic are now rethinking their subscriptions as they resume their previous lifestyles, Saunders added.

The analyst noted that compared to the same period a year prior, Netflix had approximately 27.7 million more paid customers in the most recent quarter.

Despite the slowdown, Netflix isn’t in trouble. However, to get back into growth it will need to change – but that change needs to be more about evolution than revolution.

GlobalData, Managing Director, Neil Saunders

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