After losing over one million members in the Spring as a result of its “woke” programming and escalating inflation harming millions of struggling families in Europe and North America, Netflix shares are still trading at historic lows.
The California-based business attempted to “sell” the loss of 970,000 accounts by asserting that it didn’t lose the two million members it had expected in its dour April prediction, which alarmed Wall Street and placed doubt on its long-term prospects.
Even while shares increased by almost 7% following the release of the April-June results on Tuesday, they are still down 66 percent from the year’s beginning.
In its 25-year history, the streaming service’s decline represents by far the largest quarterly subscriber drop.
During a conference call regarding the results, even Netflix CEO Reed Hastings was compelled to admit: “It’s tough losing a million members and calling it a success.”
The company has previously attributed its slowdown to increased competition from rivals during the COVID-19 pandemic, including Disney+, Apple TV, and Now TV, the inflation crisis that was largely caused by Putin’s war in Ukraine and is currently straining the budgets of millions of households on both sides of the Atlantic, and its decision to limit account-sharing.
The Crown, House of Cards, Orange is the New Black, Squid Game, Bridgerton, and Sex Education are just a few examples of the original material that Netflix has produced since its founding in 1997 by Hastings and Marc Randolph.
According to analysts, the success of Stranger Things, Netflix’s science fiction/horror series that debuted in 2016, Ozark, and Squid Game, likely saved the company from suffering worse losses.
Additionally, it keeps funding expensive movies with stars like Ryan Gosling, Chris Evans, and Ana de Armas, such as The Gray Man, which cost more than £166 million to make.
Others, however, contend that ‘woke’ entertainment like Dr. Ibram X Kendi’s Antiracist Baby, Meghan Markle’s disastrous project Pearl, and He’s Expecting, which features a pregnant male, has turned off viewers.
Additionally, it’s thought that Netflix’s crackdown on password sharing has accelerated users’ departure from the site.
The company has received criticism from viewers who claim they are not interested in “patronising, virtue-signaling lectures.”
For instance, critics of Netflix’s Resident Evil adaptation criticised the streaming giant for turning the main characters awakened and vengeful toward men, according to Cosmic Book.
Additionally, it has drawn criticism for siding with comedians Ricky Gervais and Dave Chappelle over controversial jokes about transgenderism in their most recent comedy specials.
‘Our challenge and opportunity is to accelerate our revenue and membership growth by continuing to improve our product, content, and marketing as we’ve done for the last 25 years, and to better monetize our enormous audience,’ Netflix wrote in a letter to investors.
This is the first time that Netflix’s member numbers have decreased in two consecutive quarters since it started selling video streaming services 15 years ago, following a loss of 200,000 users in the first three months of the year.
A stark contrast to the pandemic-driven growth that Netflix had during the first half of 2020, when its streaming service added over 26 million customers, is the loss of about 1.2 million subscribers during the first half of this year.
Netflix started branching out last year by including free video games to its streaming service after seeing potential danger looming.
Netflix announced in April that it would crack down on the widespread sharing of subscriber passwords and take another step it had previously scorned by introducing a less expensive tier of its service that would include commercial interruptions.
Obviously, this hasn’t been enough to spur subscriber growth.
Without going into further detail, Netflix announced on Tuesday that the crackdown on password sharing and the ad-supported strategy will both start early in 2019.
The pricing of the streaming option with commercials was not disclosed by the corporation.
It’s wonderful that our subscribers enjoy Netflix movies and TV episodes so much they want to share them with more people, said Chengyi Long, director of product innovation, in a blog post on Monday.
However, the extensive account sharing that exists now among households jeopardises our capacity to invest in and enhance our service in the long run.
In March, Netflix started testing a “add a home” membership service in Chile, Costa Rica, and Peru.
According to Long, this feature will soon be available in Argentina, the Dominican Republic, Honduras, El Salvador, and Guatemala.
By the end of the year, according to Netflix, a widespread implementation of an account-sharing payment system is planned.
While it is evident that Netflix hopes these adjustments will increase its 221.6 million global members, the company also runs the danger of alienating users to the point where they stop using the service.
When it first announced plans to start charging for its fledgling streaming service in 2011, which had previously been offered for free with its conventional DVD-by-mail service before its global growth, it was met with a backlash from customers.
After the adjustment, Netflix lost 800,000 subscribers, which prompted Hastings to apologise for the spin-poor off’s implementation.
In an effort to give customers another reason to subscribe, Netflix last year changed course by adding video games to its service at no extra cost.
According to The New York Times, Netflix is collaborating with Microsoft to introduce a less expensive subscription option that includes commercials by the end of this year.
After a disastrous first quarter in which it lost customers for the first time in a decade and after years of opposition to the whole idea of showing commercials, Netflix decided to build the more affordable service.
Microsoft will be in charge of creating and overseeing the platform used by marketers to deliver advertisements to Netflix subscribers.
According to Enderle Group analyst Rob Enderle, “These income numbers buy them time, and they need time to focus on stopping the bleeding.”
Netflix is up against a lot of competition, so their ability to cling on as long as they have shows how tough they are, but they are still in trouble.