Is Netflix digging its own grave?
Rough times for Netflix
Netflix is still the most popular TV network in the US, accounting for more than 7% of all TV viewing, more than double any paid service; however, it's been losing customers at an alarming rate.
After losing almost one million users last year, it added only 100,000 users in the US and Canada in the first quarter of 2023. Overall, Netflix added only 1.75 million customers instead of the 2.5 million expected by investors, which caused its share price to drop more than 35% in mid-April.
Needless to say that investors are not happy and pressuring the company to turn things around.
Netflix attempts to increase revenue
As customers started leaving the platform, Netflix began implementing changes in its business model to try and increase revenue. One of the most obvious choices was rising prices.
Netflix has been increasing its fees sharply around the world. In the UK, for instance, some subscribers are now paying a third more than they were a couple of years ago. The problem is there was no real change in the product or service to justify the rike and, while there is still no reliable data to determine it, this measure may do more harm than good in the long term, even though Netflix stands by it, saying it has “among the best retention in the industry”.
Whether that will hold or not remains to be seen, but the fact is Netflix doesn't have a lot of room to grow in many of the markets where it's present. In the US and Canada, for example, 75M out of a total of 142M households have a subscription to Netflix.
With that in mind, Netflix is looking to expand to households and regions that it could not previously reach because of its prices by introducing an-supported tier at a discounted price.
But that is only part of what the company is doing to increase revenue.
Netflix password-sharing fee
This is Netlifx's latest bet to tap into a potential source of additional revenue. According to Netflix, over 100 million people use an account they don't pay for through password sharing. The company allowed it for years, but given the current situation, it decided to start charging a small fee for people sharing their accounts with others outside of their households.
Netflix is currently testing this model in some South American countries by charging an additional fee of around $3 a month if people share their accounts with someone outside their household.
That's not a huge fee, and people should not be bothered by it, so it's a great plan, right?
Well... no.
It's hard to say whether Netflix was expecting a negative reaction and prepared for it, but the new policy is already facing a lot of backslash in Brazil.
Several customers filed complaints against Netflix, and the Customer Protection bureaus of several states notified the company, demanding it justifies the change in their billing policy.
The Customer Protection Bureau of Parana, one of the states that notified Netflix, mentioned that the concept of "household" the company uses is confusing since the service can be used on mobile devices. They say that since Netflix uses sentences such as "watch wherever you are" in their promotions to the public, it makes no sense to try and limit access to households.
Netflix must provide the answers requested by the bureaus later this week,, so we shall see whether the new fees will stay or Netflix will back down on it.
In any case, it's a clear sign that people are not happy and will not take will back down.
In any case, it's a clear sign that people are not happy and will not take anything that it's thrown at them, so Netflix better step up their game.
Final thoughts
Netflix is having a hard time and it is unlikely that the situation will change anytime soon. Even if this new pricing policy sticks, it will only (maybe) solve a short time problem, which is cash flow.
That is important, sure, but if it wants to survive, Netflix needs to start looking beyond its financial KPIs and focus on the product, which has been stagnant for some time.
While its main competitors are looking to expand their services, integrating with other platforms and adding other entertainment packages such as sports to their portfolio, Netflix has done nothing but inflate its catalogue with productions that are, in many cases, questionable at best.
If it doesn't change its ways, the company that slayed giants and changed the movie industry forever may fall a victim of its own success.
Posted Using LeoFinance Alpha
Congratulations @tokenizedsociety! You have completed the following achievement on the Hive blockchain And have been rewarded with New badge(s)
Your next target is to reach 5250 replies.
Your next target is to reach 7000 comments.
You can view your badges on your board and compare yourself to others in the Ranking
If you no longer want to receive notifications, reply to this comment with the word
STOPTo support your work, I also upvoted your post!
$3 additionally monthly fee for sharing password is ridiculous in my view. That's not really where they should focus on in increasing their revenue. I think Netflix over the years have diverted more from their core product development. I wish for them to remain at the top for awhile more but they're losing ground on many aspects on the streaming industry.
You are right Netflix is adding to its own problems. The price hike policy would not delight it's subscribers especially when they are facing high inflation in their daily life.