Over the course of the last decade, the name Netflix has become synonymous with film and TV. The platform has completely transformed the way we consume visual media, releasing some of the most-watched movies and TV-series and providing users with a treasure trove of content available ad-free and on-demand.
However, last week Netflix released its quarterly report for the first three months of 2022, painting a bleak picture for the future of the platform. The first quarter of 2022 saw Netflix lose 200,000 subscribers, the first time it has reported a decrease in subscriber figures in 10 years. The company also announced that it expects to lose a further two million subscribers in the second quarter of this year. This sent the company’s share price tumbling, falling by 35 percent and wiping $54 billion off its market value.
A portion of the subscriber losses can be explained by factors outside Netflix’s control such as the war in Ukraine, which prompted Netflix to shut down its platform in Russia. This resulted in the loss of 700,000 subscribers, reversing the small growth the platform did experience in European subscriber figures.
Netflix has appeared to have reached its subscriber ceiling and is now facing significant competition from a variety of competing platforms. The emergence of Disney+, Amazon Prime Video, and others has had a significant impact on Netflix’s performance.
In the wake of the poor quarterly performance, Netflix has announced that it intends to clamp down on password sharing. Netflix believes that up to one million households are password sharing and it is expected that the platform will attempt to introduce an additional fee for those accounts being used by multiple people outside of the one address. Netflix’s co-chief executive Reed Hastings even suggested Netflix could move towards an advertisement-based model, something the company has always been strongly against.
A Golden Age of Streaming
Netflix forever changed the way we consume film and television. When the streaming platform emerged on the scene, it consolidated the vast catalogue of visual media content that was already in circulation, onto an easy to use, ad-free platform. It afforded subscribers quick, easy, and on-demand access to huge amounts of content through their phone, computer, or television.
In 2012, Netflix began to produce its own content, going on to make hit shows such as House of Cards, Stranger Things, Orange is the New Black, and Squid Games, to name but a few. While more recently it has begun to have success in producing feature-length films, with films such as the Martin Scorsese directed Irishman, Don’t Look Up, and Power of the Dog all receiving Best Picture nominations.
However, the streaming landscaping is changing. The emergence of the likes of Disney+ represents attempts by the traditional content makers to get a slice of the pie that Netflix, as the biggest streaming platform on the market, has had almost exclusive enjoyment of for the best part of a decade.
This represents a backwards step, at least from a consumer’s perspective. As content producers like Disney establish their own streaming platforms, they take with them their extensive catalogue of content, locking it away from consumers behind another monthly subscription charge, leaving consumers in the predicament of having some of their favourite films and shows spread across several different platforms.
The increasing fragmentation of the content will likely serve to push more people to obtain their content through piracy. As streaming platforms become less convenient, more expensive, and afford less choice, the incentive and ability for subscribers to pay for them disappears.
However, some will undoubtedly welcome the news of Netflix’s difficulties with little sympathy. Netflix has posed a huge threat to traditional cinema, ever since it took over the film and TV landscape over a decade ago. In 2018, Cannes Film Festival announced that films had to have had a French theatrical release in order to be eligible for the festival, resulting in Netflix pulling their films from the festival. With calls for a similar prohibition at the Oscars, it’s easy to see the animosity between old and new, as Netflix and its peers threaten the already precarious cinema industry.
Mark O’Rourke – Business Correspondent