The competition in the streaming service market is too fierce. All major players are spending too much on new content. But because of various reasons, those investments don’t bring as many subscribers as planned. Vise versa, some of them are losing many subscribers quarterly. For instance, in the first quarter of 2022, Netflix lost 200,000 subscribers. What’s worse, the streaming service is expecting to lose over 2 million subscribers in the second quarter.
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“Our revenue growth has slowed considerably,” Netflix acknowledged in its letter to shareholders. “Covid clouded the picture by significantly increasing our growth in 2020, leading us to believe that most of our slowing growth in 2021 was due to the Covid pull forward.” Netflix announced that in the first quarter of the year, it had 222 million subscribers. Thus, we are talking about the world’s largest streamer.
In fact, Netflix has many problems to solve. The streaming service has increased prices. This caused a large number of subscribers to cancel their plans. Also, the company has to struggle against password and login share. If you think not many users watch Netflix without paying for it, then you should know that according to Netflix’ estimations, there are more than 100 million households that use the service via shared passwords. “It’s harder to grow membership in many markets,” as a result of the situation, Netflix said.
$NFLX -25% pic.twitter.com/ChqjpC0Qxr
— Joe Weisenthal (@TheStalwart) April 19, 2022
On the other hand, the service is facing serious competition from rivals. All of its competitors are doing to provide a better content at more affordable subscriptions. However, the situation will worsen later this year when Disney Plus launches ad-sponsored lower-cost plans. Because of the Russian invasion of Ukraine, Netflix had to suspend service in Russia. This caused a subscription base use worth of 700,000 households.
So what comes next? “Our plan is to reaccelerate our viewing and revenue growth by continuing to improve all aspects of Netflix — in particular the quality of our programming and recommendations, which is what our members value most,” Netflix said in its earnings letter. “On the content side, we’re doubling down on story development and creative excellence.” The company noted that “on the product side, we recently launched ‘double thumbs up’ so members can better express what they truly love versus simply like – enabling us to continue to improve our personalized recommendations and overall experience.” Netflix also says international success is critical to its future. “Over the longer term, much of our growth will come from outside the US,” the company said.
