Netflix is having a miserable year. The streaming giant lose 200,000 subscribers in the first quarter of 2022 — his first loss in over a decade – and fell around 1 million more in quarter two.
The company’s problems have raised concerns that video streaming is dying out, but research suggests there’s still plenty of life in the industry.
A Possible research by Hub Entertainment Research estimated that 89% of US consumers subscribed to a streaming service in 2022 – an 11% increase from the previous year.
“Netflix’s subscriber loss in the first quarter of 2022, and expected losses in the following quarters, represent a small portion of the global subscriber base,” said study co-author Peter Fondulas.
“And in fact, a service as ubiquitous as Netflix only has so much room left to grow at one point. In our view, it would be a serious mistake to view the Netflix experience as a sign that streaming TV services are about to decline, as some analysts have suggested.”
Other studies have uncovered further reasons for optimism. For example, Antenna found that first quarter US subscriptions rose in the Premium SVOD (Subscription Video On Demand) category 4.0% quarter-on-quarter and 24.7% year-on-year — despite Netflix’s losses.
Zuora, a subscription software provider, has also released positive data. The company discovered that the monthly churn rates among its customers are below pre-pandemic levels – down 19% from three years ago (March-May 2019 to March-May 2022), and 11% in the last three months alone.
a march research by Deloittemeanwhile, thought that tAverage customer churn in the US has remained constant at 37% since 2020.
None of this means everything is rosy at Netflix. The company’s user base has been exhausted by: draw the service in Russia, a crisis in the cost of living, use of shared accounts, and a recent price increase.
Still, many analysts believe the biggest problem is the rise of Netflix rivals.
Netflix is now the one being disrupted.
Competitors, including Disney, Amazon, HBO Max and Apple, are now catching up with the frontrunner.
Disney+ for example, 7.9 million paid customers added in the first three months of 2022, while HBO and HBO Max ended March with 3 million additional subscribers than at the end of last year.
Netflix users, meanwhile, seem to be increasingly unhappy with the streaming service. A recent survey by tech entertainment company Whip found Netflix dropped from number two in the industry for customer satisfaction by 2021. to the fourth this year. The company is now behind HBO Max, Disney+ and Hulu.
Consumers now face an abundance of choice at a time of tighter household budgets — and some are dumping Netflix for its rivals.
“Netflix once disrupted the entertainment space, but is now disrupted by competing streaming platforms that have aggressively scaled up,” said Forrester VP and Research Director Mike Proulx in a statement last week.
Growing competition has led Netflix to reverse its stance against ads. This month, the platform revealed it’s partnering with Microsoft to introduce a cheaper, ad-supported subscription.
They need to focus on keeping their current subscribers coming back.
Research suggests the move could be successful. A December survey from Forrester found that 43% of US online adults who use a streaming service are concerned about how much they are paying — and 44% will accept ads if it means paying less.
The company has also revealed plans to crack password sharing. But Tien Tzuo, the CEO and founder of Zuora, argues that further changes are needed.
“They’re still the king of streaming, but to continue leading the way, they can’t just focus on getting subscribers, they need to focus on getting their current subscribers back,” he said.
“In addition to more shows, Netflix should rethink the binge, offer annual plans and unbundle their content to create smaller, cheaper (and ad-free) offerings.”
Such steps may boost Netflix’s user base, but rivals are also improving their product offerings.
Consumers can reap the benefits of this competition. However, Netflix faces further threats to its market leadership.
HT: TV technology