OPINION: The crown was always going to slip, the question was how Netflix would respond when it did. And I think its response reveals a degree of anxiety about its current situation.
In its quarterly earnings report, Netflix said it lost around 200,000 subscribers in the first quarter of 2022, and projects as many as 2,000,000 leaving the service in the second, its share price tumbling a 25% in the wake of the news.
The response has been entirely predictable – try and see where else money can be made. Password sharing is apparently costing the company billions, but I think that’s an optimistic figure based on the presumption non-paying users would convert. I’m not sure they would.
Netflix has ‘hinted’ it’d like to put a stop to password sharing, trialling tests in South America where people pay extra on top for those living in different households. That doesn’t sound like a response to why people are leaving the service, but a stop-gap to plug the leak.
Netflix advocated password sharing in the past, even positioning it as a sign of strength in 2017 with a tweet that hasn’t aged well that ‘love is sharing a password’. If subscriptions were still trending upwards, they probably wouldn’t be bothered about it all but now it’s a lightning rod for their ills when their problems are multi-faceted.
Another idea is the introduction of a cheaper ad-supported model. Jumping to this subscription model is late in the game for them as nearly every other ‘major’ streamer has this tier, with Disney+ announcing plans for one. Netflix looks like a quarterback scrambling in the pocket, looking for a receiver but seeing the route too late.
When it was a choice of them or Prime Video, it was easier to make forward-thinking decisions. Netflix even invited more competition in the idea it would accelerate cord-cutting and lead customers into the arms of streaming services. But it hasn’t worked out like that. Being in front can inflate confidence, and when rivals eat into your lead, you start to look behind. The form that got you to the front suddenly becomes shaky.
Stopping password sharing won’t alleviate Netflix’s woes because that’s only part of the problem. Subscriber growth is slowing and price hikes in consecutive years hasn’t help.
It’s not the home of as many streaming hits, losing out on being the first streamer to win the Best Picture Oscar to Apple TV+ (which must have hurt). Disney+ is benefitting from the infusion of Marvel plus Netflix has been cancelling likeable shows left, right and centre, which gives series less of a chance to grow their audiences and subscribers less of a reason to continue.
Quite how Netflix navigates these shaky waters I’m not sure, as I think all streaming services will hit a rock (and not the same one). This may be the first sign the market has saturated, that there’s an iceberg ahead and as Netflix is still in front, they’ll be the first to encounter it.
Password sharing isn’t the issue – people just aren’t enjoying Netflix as much as they use to.