Netflix this week reported that it lost 200,000 subscribers in the first quarter of 2022, marking the platform’s first drop in a decade. However, the worst is yet to come as the company estimates it will lose another 2 million users in the second quarter. In addition, a 35% drop in its share price caused about $54 billion of its market value to disappear overnight. The situation is clearly not good, and the platform is already exploring measures to change it; among them changing its strategy to launch original content focus on the quality of the titles, not the quantity.
But moving from quantitative to qualitative frameworks requires Netflix to accept great financial discipline. As published Wall Street Magazinethe company decided to renew production agreements favor original titles that can offer higher returnsrather than the larger ones. To do this, the relationship between the audience of the program and its budget will be mainly analyzed.
As such, Netflix aims to release fewer of its own films and series in 2022 compared to the 500 titles released in 2021. However, this does not necessarily mean that he will reduce the cost of their production; The company is still thinking increase by $20,000 million investment in content production during this year. The idea is not to tighten your belt, but to make smarter choices about where to spend your money.
This will be a problem for the platform, especially when it comes to major references to American film and television. After all, Hollywood is accustomed to Netflix spending millions without thinking too much about the result to be achieved. That the platform is now considering cutting ties with games that don’t make big profits, regardless of their critical attitude, is of particular concern to producers.
Netflix must learn to see beyond your belly button
There is a consensus in the entertainment industry that Netflix he rested on his laurels, due to the growing competition in the streaming world. Being the leader in terms of the number of subscribers in the world would lead to the fact that it did not attach much importance to the growth of its competitors, who introduced a very powerful weapon. Disney+ ended the Marvel Cinematic Universe and star Wars; hbo max, with premieres at the same time as the movie poster (or with very little time difference); D Paramount+ played an interesting card for sentences such as Halo D Star Trek: Picardjust to mention a few cases.
However, Netflix claims that the reason for its recent downfall is that users are sharing their account passwords. The platform ensures that shared accounts cost you money about 100 million additional subscribersand that is where you should focus your efforts. And while it’s true that attracting at least some of these people and turning them into real customers will go a long way, it looks like it’s aimed at the tree, not the forest.
Netflix’s contempt for its competitors would gradually become a serious problem. According to the manufacturer Jeffrey Fierson, the platform hasn’t even planned a strategy to ensure that some of its releases don’t coincide with the premiere of important games from other streaming services; the manager experienced it firsthand when his series dawn debuted on Netflix almost simultaneously with The Mandalorian on Disney+.
“If there is one thing that I would say is Netflix’s fault, it’s that they are an island. you can’t see what’s going on behind your wallsor what they know, and the arrogance is so great that they don’t care,” he said. WSJ.
Overview of content created outside the platform
That Netflix plans to release fewer but higher quality original series and movies is not the only idea the company is mulling over. In an effort to become more financially responsible, their top managers are also paying attention to reduce the cost of third-party content.
One of the measures will be to reduce the budget of new programs created by studios outside the platform by up to 25%. But that would not be the only one; they will also seek to change the way such content is licensed in the long term.
Until now, Netflix has guaranteed the rights by paying a surcharge on production costs. For example, it consisted of a figure that included 20 to 35% of the series’ total budget. However, now they will offer pay a fixed amount so that the numbers do not go off scale in case of an increase in cost.
Let’s see if the change in strategy will give results in the medium term. The truth is that Netflix is bracing itself for the shock of the second quarter of 2022, hoping to return from the second half of the year. For now, end users will not face major changes other than implementing a cheaper plan and advertising; but they can expect a prime catalog slightly less busy than in 2021.
Source: Hiper Textual
