Netflix has announced that in the first quarter of 2022 it lost 200,000 subscribers compared to the final quarter of 2021. This is a huge blow to the company, given that it had predicted a growth of 2.5 million. What’s more, the company expects subscriptions will dwindle by a further two million in its second quarter. Prior to its recent loss, Netflix had consistently been growing its subscriber base. The platform’s easy-to-use interface, investment in original content and data-driven suggestions bolstered its popularity with consumers. The COVID-19 pandemic accelerated its widespread adoption and cemented its leading position. However, the cost-of-living crisis, Russia-Ukraine conflict, and increasing competition have taken their toll.
Households are being forced to tighten their budgets as the cost-of-living soars rapidly. In the UK, inflation has risen to its highest rate in 30 years. The UK is not alone in this crisis, with inflation soaring globally. Household budgets are increasingly under pressure from surging energy, fuel and food prices. As this crisis worsens, consumers will increasingly forgo luxuries such as Netflix. On top of the cost-of-living crisis, Netflix’s withdrawal from Russia amid the Ukraine conflict has hastened its subscriber loss further.
With the influx of competition to the streaming market over the last two years, we are likely to see consumers forgo multiple subscriptions. As consumers shop around for their favored service, Netflix must beat its competition if it is to recover. This will be no mean feat, with the likes of Disney+, Amazon Prime Video, Paramount+, and HBO Max flooding the market.
Investing in original content will continue to be key for Netflix’s recovery. It has seen huge success with content such as Squid Game, The Queen’s Gambit, and Bridgerton. Continuing to offer sought after titles will stand the company in good stead to ride out the difficulties it is currently facing. The company will also look to leverage the popular content it already offers by offering new series of franchises such as Stranger Things, Ozark, and Bridgerton. With streaming markets in North America and Western Europe becoming increasingly crowded, international expansion could also prove shrewd. Given the untapped potential of areas of Asia, Latin America, Middle East and Africa, there is huge opportunity for the company. Continuing to invest in global content, such as was seen with Korean-produce Squid Game, would be beneficial to this strategy.