From little red envelopes in the mail, to an app downloaded by millions, Netflix has had a substantial ‘glow up’ over the years. However, with subscribers reaching an all-time high in 2021, the question must be asked; What happens when there is no one new to subscribe?
In 2022 Netflix saw a drop in subscribers for the first time in over a decade. This drop began with the loss of two hundred thousand subscribers between the end of 2021 and the start of 2022. Netflix then lost a further nine hundred and seventy thousand subscribers between the first and second quarter of 2022.
In a letter to shareholders earlier this year, the company broke down this loss to three main factors. The first factor is the dramatic rise in popularity of other streaming platforms such as Disney Plus over the last few years.
The second factor that has led to this drop is the Ukraine invasion which saw Netflix end their relations with Russia. “Given the circumstances on the ground, we have decided to suspend our service in Russia,” Netflix said in a statement in March. This suspension resulted in no new subscribers in Russia and the cancellation of all active Netflix accounts in Russia, when their billing period was over.
The third factor that has led to this plateau of subscribers is that Netflix seems to have hit a wall in reaching a new market. Basically, everyone who wants to use Netflix either has their own account, or has access to a friend’s account.
Netflix is now scrambling to restructure and make the best out of this less than ideal situation.
In the coming months, Netflix will attempt to gain access to a whole new market by releasing a new subscription plan for Netflix, priced below their base level plan, which will include ads. This plan is targeted at those who cannot afford regular Netflix but don’t mind ads. This is Netflix’s attempt at tapping into a previously ignored audience.
“We will introduce a new lower priced ad-supported subscription plan for consumers, in addition to our existing ads-free basic, standard, and premium plans,” Greg Peters, Chief Operating Officer of Netflix, announced in July.
Netflix isn’t the only company that is attempting to look for new customers. “On December 8, Disney+ will introduce its much-anticipated ad-supported subscription offering in the U.S., delivering more choice to consumers than ever before,” The Walt Disney Company announced last week.
Netflix also plans to increase their subscriber numbers, and further their revenue through more tightly monitoring households with shared accounts. “In addition to our 222m paying households, we estimate that Netflix is being shared with over 100m additional households,” the company told their shareholders in their quarterly letter.
Despite their drop in subscribers, Netflix has consistently seen growth in their revenue. The company brought in just under sixteen billion USD in the first half of this year, which is over one billion dollars more than the same time last year.
(Featured image: Mollie Sivaram)
