In the letter to shareholders regarding its financial results for the first quarter of the year, Netflix highlighted this 100 million families, who are not direct customers of the platform, use a third-party account to access the broadcast service. The simultaneous loss of 200,000 subscribers per quarter prompted Netflix to find a medium- and long-term solution to the joint account problem outside of its Terms of Service.
to me CNBCis the first time in 10 years that Netflix has lost subscribers in a quarter of a year, and Analyzes indicate that in the second quarter the decline will be in others 2 million subscribers.
This data, along with the 100 million households who currently access the service using a non-trackable account, and outside the Terms of Service, Netflix is taking appropriate countermeasures.
Reasons why Netflix is slow
Netflix He explained to its shareholders that subscriber growth in 2020 due to periods of pandemic-induced shutdowns has also been overshadowed by reasons for the slowdown it felt in 2021; Which, on the other hand, also has other interpretations and equally affect the results of the last quarter ended March 31.
The first brings together factors that Netflix can’t directly control, such as adoption of connected TVs (since most of the service is viewed via TV), data costs and on-demand entertainment adoption. These elements are not necessarily harmful to society, but they contribute to creating instability in predictions.
Second, the company actually highlighted that in addition to 222 million paying families, it estimates that Netflix is shared with more than 100 million other families. However, highlight it Account participation as a percentage of members who pay the most has not changed over the yearsbut, along with the former, increases the difficulty of increasing subscribers in many markets.
Then he pointed out the competition, not only for services that could originally be compared to Netflix services, such as Disney + or Prime Video, but also to those services. It has grown into traditional TVs that have provided live and on-demand content. Of course, Netflix has added to all this the current geopolitical instability and slowing economic growth.
Solution: Charge a premium for joint accounts outside the home
Netflix’s plan is to increase views and revenue. In addition to solutions related to the quality and presentation of content, the adoption of “double thumbs” to better identify the tastes of users, Netflix has clearly expressed its desire to better monetize account sharing.
Netflix now has ‘Double Likes’: Suggestions for what to see will become more accurate
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Message text:It is possible that the participation has helped fuel our growth by getting more people to use and enjoy Netflix. We’ve always tried to make sharing within the member’s family easy, with features like multiple profiles and broadcasts. Although these options were very popular, they caused confusion about when and how to share Netflix with other families.. “
Then the active pilot program in three Latin American markets recalled that Allows, at an additional cost, to legitimately share the account with other members who are not part of the family unit.
Netflix, those who share the password with friends and acquaintances will pay more. Test starts in South America
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So Netflix will likely push towards such a solution in the future, but plans to expand it to more markets only in the medium and long term, which he suggested, however, It could affect already in 2023.
during Conference call with JPMorganNetflix co-CEO Reed Hastings also speculated Subscription at a lower price but with ads: “Anyone who’s followed Netflix knows I’ve been against the complexity of ads and am a huge fan of simply subscribing. [Ma] We are open to offering lower prices with advertising as a consumer option.Just in case we introduce that kind of subscription in a year or two, Hastings said.
Update 04/20: Added tag to conference call and ad subscription
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