Back in my day…Netflix was a DVD mail in subscription. But those days are long gone(ish), and pricing for the streaming giant has been going up consistently year after year. After this last price hike, a lot of people were reconsidering the service, our house included. With the plethora of streaming services at consumers fingertips, it begs the question what more does Netflix have to offer that others don’t?
Netflix has been progressing in the original content arena, looking to demonstrate value over quantity, but it doesn’t seem like it is enough to persuade people to stay. The linked article from Michele Malais with USA Today reports, “Netflix suffered the first loss in worldwide subscribers in a decade, deepening troubles that have been mounting since a surge from a locked-down audience during the pandemic’s early stages began to fade.”
This is to suggest the pandemic had a silver lining for the streaming goliath, but as restrictions begin to lift so does Netflix’s grip on attention spans. More people are no longer locked down, and cradled by the boob tube. Malais goes on to report shares of Netflix dropped 36% Wednesday morning. IGN reporting a loss of $54.3 Billion overnight. Quarterly reporting from Netflix shows subscriber count was projected to have a conservative gain of 2.5 million subscribers, but in fact they lost 200,000 subscribers during January – March.
What does this mean? Well, I can imagine the executives at Netflix are scrambling for answers. It also seems the masses have spoken with loud outcry about the price increases for the streaming service. If they would have only polled Twitter, they could have avoided all of this, in my humble, sarcastic, opinion. The answer? A lower price point plan with ads. They have to make up for the lost revenue somehow!
When people have a problem with pricing, showing them ads has become the status quo. It’s like the golden era of television coming back into style. Where ads have always been part of the entertainment experience.
The other contrast Netflix will be employing will be watchdog tactics to battle login sharing. This has been running rampant since Netflix first hit the innerwebs. Now that Netflix is all-of-a-sudden aware of their client base, their solution is to reduce cost, add advertising in programs, and restrict and/or penalize people sharing logins. Netflix was never this control hungry before, but with a broadened scope and the streaming battlefield getting increasingly competitive, this is Netflix’s solution.
I had always said before Sling’s Orange/Blue offerings, when cable television was still in commanding control there needs to be an ala carte programming package. Not everyone wants Telemundo. If I had the knowledge and capability, that would have been my million (billion?) dollar idea. I am starting to think that may be a viable solution for streaming services. In today’s market there are some “bundling” available, but not the true form of pick and choose. To have something like that, all the partners involved would have to agree on pricing, who gets what percentage, and prominent placement if each studio was bundled into one application. They have to make sure they have the viewership to make stakeholders happy.
With Netflix dropping the subscriber growth ball four of the last five quarters, investors are getting increasingly nervous. At this rate, Netflix stock could become the next GME meme stock. That may be a far fetched idea, but no one thought that would have happened to Gamestop.
The new lower cost tier should be significantly reduced in price to entice the login “borrowers” to setup their own accounts. Not to mention, what is the penalty for login sharing? Is it a three-strikes, you’re out scenario? This next quarter won’t break Netflix if they have another poor earnings call, but it will be interesting to see if these new changes will be accepted and/or appreciated.