NETFLIX MAY SOON START SHOWING ADS BETWEEN CONTENT. HERE’S WHY

The financial projections that Netflix had set its eyes on have gone wrong for them. After it was discovered that it lost over 200,000 paying customers, Netflix’s stock plummeted by 20 percent. As a result, the OTT giant may have to take drastic steps to meet its bottom line. Netflix is facing one of the most challenging times in its history.

Stagnant Growth

For years, Netflix has been struggling to expand its userbase at the rate it once did. This problem got even more aggravated because families and friends would share their Netflix account details, which Netflix has been trying to crack down on for some time. This crackdown has also led to many people either downgrading or straight-up canceling their subscriptions.

Dwindling Customer Base

In the last quarter or the previous 100 days, Netflix has lost a net total of 200,000 paying customers worldwide. This was the first time more users canceled their subscriptions than people signed up for their service. Netflix had projected that it would increase its user base. That did not happen. When the news broke of Netflix losing its customers, its stock plummeted by 20 percent. The war between Russia & Ukraine also added to this problem. Netflix lost a user base of 700,000 people when it withdrew its services from Russia.

Platform Fatigue

Netflix may have been one of the most prominent players in the OTT space some time ago, but these days, the number of OTT platforms worldwide has grown exponentially. These players have been able to chip away at Netflix’s subscriber base. There is also the fact that several countries have a number of their private players in this competitively priced space.

Let’s take India as an example. You’ll have to pay between Rs 1,788(Rs 149/month) to Rs 7,788(Rs 649/month) for a year’s subscription. The basic annual package of Rs 1,788 also limits the number of functionalities. Compared to that, almost all other OTT players have undercut Netflix’s prices, providing a few value-added services. Someone on a tight budget will go for one of Netflix’s competitors.

Losses In Foreign Market

Most of Netflix’s recent original programming for India hasn’t been received well. The shows that did perform well, like, Indian Matchmaking, were mainly designed keeping the Indian Diaspora in mind. Netflix is facing a similar situation in most South Asian countries. Shows like Squid Game from South Korea are, in fact, outliers. It did not get nearly half as much attention in South Korea as it did in the rest of the world.

Lack Of Shows That Would Bring In First Time Users

When was the last time you remember a show that Netflix presented that made you think you would buy your subscription if you hadn’t one already? Most OTT players, especially the domestic ones, have released several massively popular shows that have brought first-time paying customers onto the platform.

Take Sony Liv as an example. Shows like Scam 1992 and SharkTank India brought a hoard of new subscribers to the platform. Barring Squid Games, Netflix hasn’t had a big moneymaker show on their media in years.

Their Fiduciary Responsibility Towards  Shareholders

Finally, there is the fiduciary responsibility that Netflix has towards its shareholders. They are bound by law to do whatever it takes to ensure that their shareholders do not lose money. Given that they have projected that they are likely to lose another 2 million users over the next quarter, there is a high possibility that Netflix will take the same route that YouTube did and start renting out spaces and slots to other brands.

If this does indeed happen, Netflix, as we know it, might change forever. One of the biggest reasons people switched over from satellite television to Netflix is choosing what viewers watch when they want to and that there are no ads in between. With this set to change, let’s hope that this plan doesn’t backfire on the OTT giant.

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