Big loss for Netflix: In its current quarterly report, the streaming service recorded a drop in subscribers of 200,000. The company had predicted growth of at least 2.5 million. These numbers are alarmingly low, given that Netflix shut down its service in Russia after its war of aggression against Ukraine and thus lost 700,000 subscribers. Excluding Russia’s losses, the service would still only have gained 500,000 users. In the same quarter, 4 million new subscribers were recruited in 2021. And even then, the company fell short of its own expectations.
The company now justifies these figures in a letter to its shareholders, in which the reasons and possible solutions to the problem are already listed. External circumstances such as the war in Ukraine and the corona pandemic are only mentioned as one of four factors for the disappointing result.
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Another aspect that could explain the stagnation is that the underlying market (households with broadband internet connection), the number of Netflix-enabled devices, data costs and the speed at which the media landscape is changing cannot be controlled and forecasts be made more difficult by this. In addition, compared to the previous year, one sees oneself confronted with more and more competitive offers.
Account sharing should cost more money in the future
Netflix sees the behavior of its own users in the form of account sharing as the last disruptive factor. The letter to the shareholders states as follows:
“In addition to our 222 million paying households, we expect Netflix to be shared with over 100 million other households, including over 30 million in [den USA und Kanada]. The frequency of account sharing as a percentage of our paying members has changed little over the years, but linked to the first factor [der oben genannte zugrundeliegende Markt]it means it’s harder to generate membership growth in many markets – an issue that has been obscured by our COVID growth.”
In plain language, this means that Netflix has recognized that those who are currently using their service through account sharing logically have the necessary qualifications and motivation to do so. Where the accessibility of other potential target groups could be hampered by factors such as internet connection etc., the Netflix bums already have the necessary infrastructure and the necessary size as a group to be developed as a market. You can read about this and Netflix’s advertising plans Page 2!
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