With almost a million subscribers lost in just four months, Netflix seems to be in a rocky position. But what does the wave of quitting viewers signal us: the end of Netflix or the beginning of a new streaming era?
While many studios were caught napping, Netflix won the attention of audiences worldwide during the pandemic. The streaming platform built its success in offering high-quality, licensed content that didn't belong to them. The inevitable moment where Disney and other studios would enter the market with their video-on-demand services meant that much of its most viewed content would exit the stage from Netflix's servers.
The Stranger Things franchise would offer some respite with an incredible 781 million views in its opening weeks, and the season finale would even cause the site to crash upon release of its midnight finale. However, if you dare to look beyond its biggest hit show, Netflix is hitting the headlines for all the wrong reasons, with many thinking that bosses have hit the self-destruct button.
As audiences transition from lockdowns to a possible recession, cord-cutters now find themselves with increasing subscriptions that add up to over a hundred dollars a month from many all-you-can-eat models for books, music, music, and TV shows. But a shrinking disposable income means users are forced to choose which platforms provide them with the most value.
The Netflix Growth Problem
Over the last few years, loyal Netflix users have seen their subscription prices rise significantly to $19.99 / £15.99 / €20.99 per month if they want to access Ultra HD content restricted to its premium plan. The incoming squeeze on password sharing and ad-supported content comes at a time when Disney, Amazon, HBO, and Paramount keep their licensed content for their platforms.
Netflix now heavily relies on its original content, but some subscribers are turned off by what it deems to promote partisan politics, narratives, and agendas in its shows. But its most significant problem is the quality versus quantity balance of original content is way off. For every Stanger Things and Squid Games, there are dozens of poor-quality shows such as Sexy Beasts, Too Hot to Handle, and Space Force.
The collective result of these mounting problems is the loss of nearly a million subscribers, 450 job cuts representing around 4% of its workforce, and a drop in share prices compared to the start of the year. Yet, despite the well-publicized challenges, Bela Bajaria, Netflix's head of global television, recently advised that it will be business as usual with no plans to change its programming efforts.
However, as competitors continue to gain momentum with audiences, many are asking how Netflix can secure more subscribers and the growth it needs to remain the most popular streaming service? But most are united in saying it's not a good time to annoy declining subscribers users further by clamping down on password sharing or introducing adverts.
Why the streaming wars will end in consolidation
As the streaming wars gathered pace, we witnessed Disney acquire 21st Century Fox, gain control of Hulu, and launch its Disney+ platform, which is currently reaching 137 million subscribers. Elsewhere, AT&T acquired TimeWarner and Comcast snapped up Sky in the UK to go to toe with Nextflix and co. These are just a few examples of how the usual suspects are making moves for the inevitable consolidation of the entertainment industry.
A combination of too many subscription services and the rising cost of living means there is not enough space in the market for all the current players. However, suppose you dare to go down the rabbit hole of streaming consolidation. In that case, it's easy to see how the trending news stories documenting the struggles of Netflix could reduce share prices enough for a company such as NBC Comcast to acquire Netflix for the best possible price.
Netflix initially moved quickly to secure the title of being a leading innovator in the streaming space by betting everything on producing original content. But it made the mistake of putting quantity before quality. As others followed this lead, we are left with dozens of streaming platforms, each with a handful of things worth watching meaning those that stand still will run the risk of becoming the next Blockbuster Video.
The easiest way for every streaming platform to remain profitable will be to acquire its competition and subscribers. For audiences, this should mean providing better value for money in the form of more high-quality content and one less subscription to worry about. For example, Apple TV+ is a long way behind the likes of Netflix, Amazon, HBO Max, and Disney+, but could the first company to reach a $3 trillion market cap change this with a high-profile acquisition of a rival streaming platform?
It's much too early to declare that Netflix is losing the streaming wars, and all platforms will have a rocky road ahead. For example, it's only a matter of time before Disney+ subscribers feel fatigued by the heavy focus on Marvel and Star Wars franchises. Modern viewers are demanding variety, which can only be achieved by consolidation.
Many users also now seek more than just entertainment from their subscriptions. For example, Apple and Amazon have successfully developed streaming services that complement their existing service offerings. Could this trend mean that Netflix is no longer the winning strategy many thought it would be?
However, decades before the internet would arrive in our homes, CBS, ABC, and NBC dominated TV. A handful of movie studios also produced the movies that we fell in love with and still enjoy today. Although the formats and names have changed, the end of the streaming wars is likely to once again result in three big names quite literally running the show. The bigger questions are how much has changed? And what difference did cutting the cord really make for audiences around the world.
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