2022 may have started on a good note for many businesses — but not Netflix. The popular streaming giant recently announced that for the first time in two decades, they are experiencing a decline in the number of subscribers that use the platform.
A lot of people assumed that the reason for the decline could be password sharing, but Netflix is such a lucrative business that records massive profits every year, so it did not look reasonable to blame the loss of subscribers on password sharing.
For over two million people to just leave it after using it for years, it means something is wrong with the value that people are or were getting from the streaming giant. As it stands, Netflix could even be on its way to losing more customers (over 2 million) in the next quarter of 2022.
As you can already predict, the exodus of subscribers from Netflix has already started to affect their profit. The sharing of passwords could have a bit of influence in this area. But the cancellation of accounts by long-term subscribers is the main reason for the decline in profit.
The company and its shareholders are worried about this, but a solution can only come when the source of a problem is known. So here are the most prominent reasons why it is experiencing a loss in subscribers, as well as revenue.
The heavy competition
Though Netflix happens to be the most popular of them all, streaming platforms are doing pretty well for themselves. And this explains the heavy competition that is going on in the world of streaming.
Right now, there are many streaming platforms, and each of them has certain perks that another may not have, so the viewers understandably have more options to choose from and will not hesitate to leave a platform that no longer serves them.
Despite the fact that many people like Netflix, no customer owes them any loyalty, and they are freely leaving them for other streaming platforms that seemingly have more to offer.
There are Disney plus, Hulu, HBO Max, Paramount Plus, Apple TV, and so many others out there. New ones are even coming up, so people are moving on to better platforms and Netflix does not seem to be able to hold on to its own subscribers.
Another notable point with this competition is that some of these competitor platforms are cheaper than Netflix, so people want to save money and enjoy the same value from somewhere else.
Netflix stopped activities in Russia
With the current unrest in Ukraine, many businesses stopped providing their services to the people of Russia. Netflix is one of such companies that made the move, and while it was a very noble thing to do in support of the people in Ukraine, it greatly affected their business.
Netflix had a lot of subscribers in the country — somewhere between 600,000 and 700,000 people. So with the pulling off Netflix from Russia, those 700,000 accounts automatically got inactive.
When Netflix decided to join hundreds of companies to pull out of Russia, it is obvious that they knew it would negatively affect their business and revenue, but they still did it anyway.
This goes to show how much they wanted to support Ukraine, but it just happened to occur at a time when they were already losing subscribers from other counties in the world.
Perhaps, the loss of 700,000 subscribers from Russia would not have been so significant if it was not happening at such a hard time for the Netflix production company.
Netflix is losing content from major networks in the USA
Netflix used to be the go-to streaming platform for all the top shows and documentaries in the USA, but things are not that way anymore, and this could be a strong reason why they are losing more subscribers.
There are people who just want to watch these shows from media houses like AMC and NBC, but they are no longer using Netflix. Because of the competition among streaming platforms right now, these media houses may have found better offers elsewhere because they have gone to other streaming platforms.
As if that is not enough for Netflix to worry about, media houses have started to merge with the aim of having their own streaming platforms. This means that they will no longer need Netflix or any other platform to be able to push their content out there.
Media houses no longer need Netflix, and people are not really happy about the idea of being restricted to Netflix originals.
Netflix cancels good shows and keeps bad ones
Many times when you scroll through social media, it is normal to come across posts that suggest there is nothing to see on Netflix anymore. People are claiming that they do not find the shows interesting, so it is no surprise that Netflix is losing subscribers.
Before things got this way for Netflix, they had a full and interesting library. It would be hard for anyone to keep scrolling without finding something to watch, but the same cannot be said about the Netflix library now.
Though it is not right to totally blame Netflix for this, they could actually handle it better and keep subscribers loyal to them. But as studios are moving their films away from Netflix, the company is not doing much to fill up the space left by these studios.
Apart from occasional hits, Netflix no longer has that magic that once drew people to the platform — even to the point of addiction.
In their desperation to fill up their library, Netflix original shows that are not exactly fan-favorites are getting sequels, while those that people actually like are getting canceled as soon as they are not an instant financial success.
The truth is that fans are now feeling like they waste subscription fees on Netflix. Since they are not getting the value they want, they are moving away from Netflix to other platforms they consider more interesting.
Netflix increased the cost of a subscription
With the media houses leaving Netflix and even working on the best ways to beat them in the streaming market, Netflix hiked up its prices (specifically in the USA and Canada) and this made many subscribers unhappy.
As of January this year, more than 600,000 people in North America decided to cancel their subscriptions instead of paying the new price for a Netflix subscription.
With so many other streaming platforms competing with Netflix, it was not hard for people to leave the platform because apart from the lower subscription fees, media houses were leaving Netflix for these other streaming companies, so there was no need to stick with Netflix and their new prices.
When you add the 600,000 people that left Netflix because of an increase in the cost of subscription to the 700,000 people that automatically got canceled with Russia, that will amount to 1.3 million people in total.
If from these two factors alone, 1.3 million subscribers could leave the platform, then the rumors of a Netflix downfall should not be overlooked. Netflix has to do something about these cancellations before it gets too late.