Why Netflix’s subscriber drop could actually be good news for you

For the first time in over a decade, Netflix is ​​on the back foot.

Although he still has more subscribers than any other streaming service (about 221 million at the end of the year), netflix Bosses revealed in the company’s latest investor report that the platform has hemorrhaged 200,000 paying customers since the start of 2022 – a figure expected to hit 2 million by the end of June.

If the trend continues, analysts predict that Disney+ will overtake Netflix for paid subscribers by 2024, leaving the streamer vulnerable to other platforms yet to go global (like HBO Max and Paramount More) with far superior IP catalogs to choose from.

But what does Netflix’s decline actually mean for existing subscribers? The answers, it seems, are three-fold – and any attempts by the streamer to stop the bleeding won’t cause trouble for the 221 million customers keeping it afloat.

A supplement for sharers

Let’s dismiss the bad news. For starters, Netflix is ​​almost certain to start cracking down on account sharing.

Earlier in 2022, the streamer unveiled a pilot program this added an extra $2.99 ​​(about £2.50 / AU$4) to Netflix accounts sharing their passwords with family, friends and freeloaders outside the household paying the bills.

In the company’s recent investor report – which revealed that more than 100 million households across the world are currently flouting monthly subscription fees – Netflix bosses expressed a desire to double the policing ambitions of the platformwhich means that this pilot program should take effect globally in the very near future (for now, it remains limited to Chile, Costa Rica and Peru).

According to Netflix, 33% more people could be paying for the service who aren’t already doing so – so if you’re currently using someone else’s login credentials to binge Bridgerton season 2you can expect a polite (or not so polite) pat on the shoulder very soon.

Of course, password-sharing surcharges probably won’t be limited to Netflix alone. As Tammy Parker, principal technology analyst at GlobalData, explained in a statement to TechRadar: “Password sharing is a threat in the streaming industry and doesn’t just affect Netflix. Any success by Netflix in stopping unauthorized password sharing will be closely monitored and potentially copied by every streaming player.

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Netflix’s need to deal with its recent subscriber losses could then have a ripple effect on the rest of your streaming service subscriptions. As TechRadar’s US editor, Lance Ulanoff, puts it: the platform’s password sharing fees are just the tip of an expensive iceberg.

Reorganization of subscriptions

Netflix’s downward trajectory will also almost certainly impact its business model in the years to come. Business leaders, for example, are finally beginning to take seriously offer customers a cheaper, ad-supported subscription tier similar to those already offered on competing platforms such as Hulu and HBO Max.

Following Netflix’s quarterly investor report, CEO Reed Hastings revealed that the streaming service is now “open enough” to shake up its business model with the aim of both generating revenue and creating the option of lower price for new and existing subscribers – although he was previously reluctant. do this.

“Those who have followed Netflix know that I am against the complexity of advertising and I am a big fan of the simplicity of subscriptions,” admitted Hastings. “But as much as I’m a fan of that, I’m a bigger fan of consumer choice and allowing consumers who want a lower price and who tolerate advertising to get what they want makes a lot of sense.”

HBO launched an ad-supported subscription tier on HBO Max last year, while Disney plans to the introduction of a similar plan on Disney Plus later in 2022. It’s not yet clear how much Netflix’s ad-supported subscription tier might cost, or what parameters this more affordable package might place on content availability, though HBO’s model offers a useful marker for what customers can expect.

For $9.99 (about £8 / AU$14) per month, subscribers to the ad-supported version of HBO Max can access the same library of movies and TV shows as those on the standard tier, but without the ability to download content for offline viewing. or stream it in higher quality at 1080p. It is therefore likely that Netflix will replicate this approach.

“It’s pretty clear that [this model] works for Hulu,” CEO Hastings told investors. “Disney did it. HBO did it. I don’t think we have much doubt that it works. All of these companies got it, I’m sure we’ll just go in and understand rather than [testing] that and maybe [doing] it or not [doing] this.”

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According to some industry experts – like Kai Henniges, CEO and co-founder of Video intelligence – Netflix could actually use the introduction of ads as an opportunity to redefine what users consider acceptable advertising.

“As Netflix approaches this new territory, it should continue to focus relentlessly on user experience,” Henniges told TechRadar. “To some, digital advertising is synonymous with flashy banner ads, irrelevant ad content and irritating pop-ups, but Netflix is ​​in a unique position to leverage new technologies to ensure that ads not only deliver benefits in results, but also satisfy consumers with a tailored experience and real value.

“If Netflix intelligently analyzes the meaning of its content – its topics, sectors or style – it will be able to contextually match ad demand to it. Or to put it simply, Netflix should seek to serve ads that are relevant to the program or film during which they are shown.

But the introduction of an ad-supported subscription tier isn’t the only business model change that could affect existing Netflix subscribers – the streamer could also launch several new subscription types in a bid to cater to specific consumer needs.

As GlobalData’s Tammy Parker told TechRadar, “Netflix’s pricing strategy needs to evolve, especially as inflation eats away at consumers’ wallets, making them more selective about their streaming subscriptions. [Its] the plans are little differentiated, since they all offer the same content and vary only in terms of video quality and the number of screens supported.

In the near future, Netflix may therefore offer its customers more freedom to choose the type of content they pay for. Could we see an option giving subscribers exclusive access to Netflix original content, or only series instead of movies? It’s certainly a possibility, and revamping its subscription packages in this way could make Netflix a market leader in a new form of bespoke entertainment.

Bigger, better and longer lasting content

While the big changes mentioned so far will all put the ball in the consumer’s court, Netflix is ​​confident that content will be king when it comes to reversing their fortunes – which is great news for those who are frustrated with the streamer. dwindling tv library and cancel ruthless culture.

“Our plan is to re-accelerate our viewing and revenue growth by continuing to improve all aspects of Netflix – especially the quality of our programming and recommendations, which our members value most,” the CEO said. Hastings to investors after news of the company’s subscriber losses.

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Given the amount of existing IP Disney Plus and HBO Max have at their disposal in 2022 (think franchises like Star Wars, Marvel, and Game of Thrones), Netflix faces an uphill battle to prove it can. yet produce enough original content to warrant customer attention.

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Mega-hits like Bridgerton, Squid Game, and Stranger Things are great tentpole deals, but Netflix obviously can’t rely on its ability to attract an audience that will stick around for the long haul. Like Apple TV Plus – whose recent projects CODA and Severance have proven the value of investing in truly unique original programming – the streamer must trust their audience’s willingness to embrace the unknown and give their new TV series time to breathe before condemning it. in the scrap heap.

Improving “the quality of our programming and our recommendations” suggests that Netflix bosses have, in part, recognized this fact – although the streamer’s multi-billion dollar content spend must become more than an exercise in casting money it seems to be lately.

The main thing, then, is this positive change is is coming to Netflix. These recent subscriber revelations may have shaken the stock market’s confidence in the company’s enduring value, but they will also serve as the catalyst needed to ensure the platform remains the best streaming service for years to come. .

Yes, Netflix will almost certainly start charging you for sharing account passwords – but, for our money, you’ll also have more control over what you pay to watch, and you can expect renewed interest. for much higher quality original content in the future.

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