Netflix shock! Fundamental changes to the program are pending

Netflix saw subscriber numbers drop for the first time since 2011. The streaming service has now commented on the possible causes of the downtrend and how it could affect future plans.

Netflix is ​​a key component of the highly competitive streaming market. Although competitors like Disney+ have been pushing hard, the Netflix subscriber curve has always been bullish — until now. According to the quarterly report, the number of fee-paying customers decreased from 221.84 million to 221.6 million in the first quarter of 2022, which means a nice drop of 200 thousand. The numbers also negatively affect the direction of the stocks. Netflix is ​​now considering several measures to improve the balance sheet once again.

Also under discussion: shorter seasons or an advertising-funded model where individual ad segments will be shown to customers in the future. They also want to take stricter action against illegal account sharing.

Program changes affect all users

Netflix wants to cut costs in the future and choose better programs. From Netflix circles, for example, one hears that there will be no more talk shows and musicals because those genres are no longer very popular. At the very least, the money goes into other areas such as documentaries and unrecorded reality shows.

But the cuts in the series in general and the episodes in particular should be much more difficult. This trend can already be seen. So the second season of the series “Matryoshka” (eng. “Russian Doll”) has one episode less than the first. Not the only example of shorter classes. If you’re wondering how one less episode is supposed to help Netflix out of its misery, you have to understand the sometimes huge production costs. An episode of Stranger Things is said to cost about $30 million.

Speaking of Stranger Things: Netflix probably won’t mass produce such expensive productions. Instead, efficacy is required. Perhaps you are looking for cheaper products that still fetch a lot. The best example of this is the “Squid Game”. But these experiences can also go wrong. Then users get lower quality.

The last lever is the shortening of the individual loops. This possibility is also present in the room and probably should be implemented. However, Netflix director Bela Bajaria says the short episodes have no economic reasons, only creative ones.

Will we see ads on Netflix soon?

In response to the numbers, Netflix could take another drastic step. CEO Reed Hastings previously expressed his opposition to the idea of ​​running ads on Netflix. Suddenly, Hastings struck a completely different tune. The company expects to stick to an ad-supported streaming strategy in the next year or two. One is very open to the idea of ​​offering a cheaper ad-related model. The Netflix chief justified his change of opinion with greater options for users.

“But as much as I like it, I’m a huge fan of consumer choice.” And for consumers who want a low price point and are tolerant of advertising, letting that happen makes a lot of sense.”

Red Hastings, Variety

Also interesting: experts were already anticipating an announcement on Netflix in 2019

Account sharing should be severely punished

It is known that many people share a Netflix account and it is allowed within the family. But not after that. As a result of the weak quarterly numbers, Netflix intends to take tougher action against illegal account sharing in the future. According to COO Greg Peters, they want to within a year Charging additional fees for joint accounts. This practice is already being tested in some South American countries.

Also interesting: How exactly does Netflix take action against unauthorized account sharing and how does the streaming service recognize this?

This is why Netflix lost customers

In general, it has been observed for some time that the growth of Netflix is ​​slowing down. According to Netflix, this can generally be attributed to the greater competition and now significant penetration of households. Otherwise, the streaming service cites the economic consequences of the pandemic and the Russian war in Ukraine as the main reason for the new, worse numbers. In a letter to shareholders it says, among other things:

“Macro factors including slowing economic growth, rising inflation, geopolitical events such as the Russian invasion of Ukraine and some of the ongoing disruptions from COVID also have an impact.”

Netflix

Among other things, Netflix deactivated 700,000 customer accounts in Russia in response to the war of aggression. The streaming service lost hundreds of thousands of subscribers as a result of price hikes in the US and Canada. Netflix itself also refers to the illegal multiple use of accounts, which is still widespread. According to Netflix, an estimated 100 million families will use the streaming offer without paying for it themselves.

Netflix is ​​still way ahead of Disney+

Although Netflix is ​​now showing a downtrend for the first time in more than a decade, it still has the edge over the competition. For comparison: In February 2021, Disney+ had 130 million subscriptions at number two — a difference it couldn’t make up for last year. And despite the small number of users, Netflix still posted a profit of $1.6 billion this quarter. However, the streaming service is expecting fewer subscribers again in the coming months. It remains to be seen if there will be other consequences.

sources

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