PF explainersApr 20, 2022 3:35:55 PM IST
The financial projections Netflix had been eyeing turned horribly wrong for them. After discovering that it had lost more than 200,000 paying customers, Netflix’s stock fell 20%. As a result, the OTT giant may have to take drastic measures to achieve its goals. Netflix is going through one of the toughest times in its history.
So what is Netflix suffering from? Why might they have to start serving ads between content? Well, we take a look at a few factors that have put Netflix in a rather precarious position.
For years, Netflix has struggled to grow its user base at the rate it once did. This problem got even worse as families and friends were sharing their Netflix account details, an issue that Netflix has been trying to fix for some time. This crackdown has also led to many people downgrading or directly canceling their subscriptions.
Declining customer base
In the last quarter or 100 days, Netflix has lost a net total of 200,000 paying customers worldwide. It was the first time that more users canceled their subscription than people signed up for their service. Netflix had planned to increase its user base. Obviously, that didn’t happen. When news broke that Netflix was losing customers, its stock plummeted 20%. The war between Russia and Ukraine has also aggravated this problem. Apparently, Netflix lost a user base of 700,000 people when they pulled their services from Russia.
Netflix may have been one of the biggest players in the OTT space a while ago, but these days the number of OTT platforms around the world has increased exponentially. These players were able to eat away at Netflix’s subscriber base. There is also the fact that several countries have a number of private players in this space whose prices are competitive.
Let’s take India as an example. You will have to pay anywhere between Rs 1,788 (Rs 149/month) and Rs 7,788 (Rs 649/month) for a one-year subscription. The basic annual plan of Rs 1,788 also limits the number of features. Compared to this, almost every other OTT player has slashed Netflix prices, while providing a few value-added services. Obviously, someone on a tight budget will opt for one of Netflix’s competitors.
Foreign market losses
Most recent Netflix originals for India have not been well received. The shows that did well, like Indian Matchmaking, were mostly designed with the Indian diaspora in mind. Netflix faces a similar situation in most South Asian countries. Shows like squid game of South Korea are in fact outliers. It didn’t get half as much attention in South Korea as it did in the rest of the world.
Lack of shows that would attract new users
When was the last time you remember a show presented by Netflix that made you think you’d buy your own subscription if you didn’t already have one? Most of the OTT players, especially the domestic ones, have released a number of hugely popular shows that have brought paying customers to the platform for the first time.
Take Sony Liv as an example. Shows like Scam 1992 and SharkTank India have brought a horde of new subscribers to the platform. Except squid gamesNetflix hasn’t had a big money-making show on their platforms in years.
Their fiduciary responsibility to shareholders
Finally, there is Netflix’s fiduciary responsibility to its shareholders. They are required by law to do whatever it takes to make sure their shareholders don’t lose money. Given that they projected that in the next quarter they will likely lose another 2 million users, it’s highly likely that Netflix will go the same route as YouTube and start renting space and time slots from YouTube. other brands.
If that does happen, Netflix, as we know, could change forever. One of the main reasons people switched from satellite TV to Netflix was the ability to choose what viewers watch when they want, and the fact that there were no ads in between. . With this change, let’s just hope this plan doesn’t backfire on the OTT giant.