For the first time since 2011, the number of Netflix users has decreased. The company’s stock price is lower than it has been in years. The streaming provider is reacting and considering specifically adapting their software as well as the subscription model to ads. We explain the changes that will affect all customers.
After more than a decade of growth, the number of Netflix customers declined again in the first quarter of 2022. In response to the weak quarterly numbers, the streaming provider’s shares suffered their biggest price drop in a single trading day since 2004 last week. The stock lost more than 40 percent in April.
Netflix responded, offering a cheaper subscription plan with ads and announcing a tougher crackdown on customers who share their login information with others. But there are also other changes to the program that will affect all subscribers.
According to Netflix Circles, the range of talk shows and musicals will be significantly reduced due to less demand. The released production budget will flow into more popular genres such as documentaries and unrecorded reality shows. Insiders said that The Wall Street JournalThat priority should be given to the content that generates the most revenue and not the content that is most popular. An important base number is the relationship between series recall numbers and their production costs.
The series will be shortened and appear with fewer episodes per season, according to reports The Wall Street Journal. This can reduce sometimes huge production costs. A look at spending on Stranger Things shows how much savings individual episodes can bring. An episode of the fourth season reportedly cost $30 million. Netflix has not yet officially commented on production costs.
Reasons for the Netflix crisis
The streaming provider’s quarterly report didn’t bode well last week. Users are down for the first time since 2011: nearly 200,000 customers paid less in the three months to the end of March. Although Netflix lost 700,000 customers in one fell swoop due to the halt in business in Russia after the invasion of Ukraine, even with its 500,000 subscriber increase, the company would have missed out on much more than its 2.5 million forecast.
In addition to the effects of the war against Ukraine, the administration around founder and co-chair Reed Hastings justified the poor numbers with “factors beyond our control” such as the slow increase in the proportion of smart TVs connected to the Internet and inflation.
Another reason is the increasing competition. In addition to Disney, Amazon, and Apple, Warner’s HBO Max has also become an increasing focus. American competitor HBO (“Game of Thrones”) recorded strong user growth at the beginning of the year. In the first quarter, pay-TV channel and streaming service HBO Max increased total subscribers by 3 million to nearly 77 million customers. This was announced by the former parent company AT&T last Thursday.
Cluster instead of class? Industry watchers take a critical look at the strategy of spamming customers with new content, even though the quality sometimes drops. A competitor like Disney, on the other hand, relies on a handful of elaborately produced series based on famous characters from the “Star Wars” and Marvel universes, which oblige customers over a longer period of time with one episode per week. Apple TV is also using the method of releasing new seasons bit by bit for hit series like “Ted Lasso” or “The Morning Show.”