The unholy trio of aggressive competition, the sluggish economy, and the Ukraine war have sent Netflix’s subscriber count plunging for the first time in this decade. Experts suggest an even bleaker subscriber accretion for Netflix, which is surprising given its rise in popularity during Covid.
Reports state that more than 200,000 subscribers were lost in the first quarter, which led to the non-fulfillment of its projected forecast of 2.5 million new subscribers. The suspension of service in Ukraine and Russia also contributed heavily to this plunge.
Netflix stocks fell 26% and lost $40 billion of their value, just months after the news of the failing subscriber count. The company is now following the path of its rivals Disney+ and HBO Max by offering a cheaper ad-filled version for subscribers.
CEO Reed Hastings in a statement said that; Netflix is forced to introduce ads even though it goes against its philosophy. He believes that password sharing and numerous accounts are the main culprits, and assured investors of a speedy and effective solution.
Even the rolling out of highly anticipated shows like “Ozark” and “Stranger Things” is not turning the tides in their favour. Despite the fierce competition, the percentage of Netflix viewership has remained constant in the U.S showing retention and consumer satisfaction.
More than $50 billion was spent on new content the previous year, slowly marking the beginning of a streaming war. Netflix is now focusing on making vernacular content to gain more acceptance in the global markets. Also, the company hopes to grow by converting broadband households into streaming services.
The rising popularity of Tik-Tok and youtube among Gen Z indicates a clear preference for movie streaming.
Although there are some issues that Netflix needs to address, the overall future of the streaming service seems bullish.