What happened with Netflix? What do you want to do to face your sharp drop in the stock market? The leading streaming platform worldwide has had a collapse in its actions, to which different factors are attributed and which it plans to remedy with measures that directly affect the user. Do you know which ones they are?
MORE INFORMATION: Netflix loses 200,000 customers in first quarter and projects 2 million more will leave this year
The company lives its worst horror movie. It reported that in the first quarter of 2022 it had a massive loss of 200,000 subscribers, the largest in eleven years. Its shares, meanwhile, on Tuesday, April 19, lost a third of their value.
The drop in its shares could erase the gain of the past two years, when its business boomed as new customers flocked to its platform to weather the COVID-19 pandemic lockdowns. And now, what will Netflix do to try to stop a further collapse?
WHAT IS THE DOWNFALL OF NETFLIX ABOUT?
Netflix lost a total of 200,000 subscribers in the first quarter of 2022, a period in which it obtained net profits of US$1,597 million, a figure less than US$1,706 million than in the same period of 2021, indicated the Wall Street Journal. And as the icing on the cake, April 19 became a black Tuesday for the platform with a 35% drop in the value of its shares, which reached US$223. This is the biggest crash in more than a decade.
Netflix had planned to add 2.5 million customers in the period under review – and analysts expected even more – but, instead, lost subscribers for a total of 221.64 million viewers., This represents an increase of 14 million of paying users or 6.7% compared to the first quarter of 2021, but a decrease compared to the fourth quarter of last year.
WHAT ARE NETFLIX’S PLANS TO FACE THE DROP IN SUBSCRIBERS?
Netflix is considering some alternatives or more than one to deal with its stock market crash and subscriber flight. These are:
- Collect shared accounts: The company will charge account holders an additional amount for adding user profiles of people outside of their household. This measure began to be applied in Chile, Costa Rica and Peru. Users can add up to two additional profiles for US$2 to US$3 per month, on top of their regular rate.
- Add advertising: Another alternative is to create a cheaper subscription model, but one that includes advertisingas other platforms already do in USA. This would be possible “over the next year (2023) or within two”, according to its co-founder, Reed Hastings.
- Reduce investment in own content: Netflix has been a machine for making series, movies, and shows, but not all of its productions have been successful. In the first quarter, the highlights were “Los Bridgertons” and “Inventing Anna”. Given this scenario, Netflix’s financial chief announced that they are going to lower their investment in the coming months: “We are going to cut some of our spending on both content and non-content”.
WHAT DUE TO THE FALL OF NETFLIX?
The blow that the streaming platform has suffered is mainly due to these factors:
- Suspension of service in Russia: constitutes the loss of 700,000 subscriptions. “Without this impact, we would have had an additional 500,000 subscriptions,” compared to last quarter, Netflix said in a statement.
- IExchange of identifiers and passwords: that allow many people not to pay to access the platform. Netflix figures indicate that 222 million active payment accounts on Netflix, but another 100 million households access with the credentials of another user.
- The competition: New platforms such as Disney+, Hulu and HBO Max have appeared, which also generate their own content.
