Netflix’s slide is a warning to the streaming industry

This week, Netflix reported that more subscribers left than they signed up in the first three months of the year. This is the first time Netflix has recorded such a large drop in users, reversing a decade of steady growth.

On April 20, the company’s stock fell 35%, resulting in a $50 billion market capitalization loss. Bad luck doesn’t just happen to Netflix, as shares of companies like Disney, Warner Bros. Discovery and Paramount also simultaneously declined.

Netflix said that the increased competition and the decision to stop operating in Russia had a significant impact on the group’s economy. After years of dominating the online market, this is a time when Netflix is ​​easily knocked out by other online platforms.

In March, Netflix began testing surcharges for users who share an account with people who aren’t in the same house. CEO Barry Diller thinks this new business model of Netflix has not really worked.

To capture the trend as well as compete with Netflix, traditional TV channels have been “pouring money” into online movie viewing services.

Typically, Disney has invested billions of additional dollars in its huge content store. Discovery and Warner Media completed a merger this month to compete with other streaming services. Not stopping there, CNN also introduced to the public its own online platform.

However, from the Netflix incident, it can be seen that those huge investments entail a lot of risk. Analyst at LightShed Partners, Rich Greenfield predicts the streaming market could be in trouble for the next few years.

Kevin Westcott, vice president of consulting firm Deloitte, said many consumers tend to cancel services when their favorite program ends. According to Deloitte, 25% of customers in the US canceled a streaming service just to re-subscribe to it within a year.

“They are frustrated because they have to subscribe to so many things to see the content they want,” Mr. Westcott added.

Over the past five years, Netflix has spent millions chasing the Academy Awards. To date, Netflix has yet to win an Oscar for best picture. However, the giant’s serious effort in filmmaking has been praised.

American film producer Michael Shamberg thinks that if Netflix’s subscriber growth slows down, it will lead to the platform being forced to cut back on content as well as creative shows and movies aimed at Oscar.

One question is whether Netflix’s original content is strong enough to make a difference, as more financially wealthy companies like Apple and Amazon continue to increase spending.

Critically acclaimed shows like “Severance,” which is featured on Apple TV+, and the upcoming first season of the “Lord of the Rings” prequel, which Amazon is said to have spent more than $450 million on .

Faced with an unfavorable economic situation, Netflix was forced to do something unprecedented in the past, which is to insert ads. Netflix co-CEO Reed Hastings, who has vowed never to have ads on Netflix, said the company would consider introducing a lower-priced tier of ad-support in the next year or two. Netflix also said that it will prevent sharing of passwords.

However, Netflix has no experience selling ads, while rivals like Disney, Warner Bros. Discovery and Paramount have extensive advertising infrastructure. Mr. Hastings tried to reassure people that Netflix has been through tough times before and that it will work out its problems.

Thai Hoang (According to NYP)