The year 2022 seems to have started badly for Turkey. Netflix (NFLX34).
After a spectacular decade with Netflix reaching 222 million subscribers worldwide, the platform is facing its first failure.
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The release of results for the first quarter of 2022 to shareholders immediately impacted the equity market, as required by US listed companies legislation. New York Stock Exchange.
Between January and March of this year, 200,000 fewer subscribers were registered. And the actions in it Nasdaq suffered a vertical collapse: 27.5% after market.
In recent months, much more optimistic expectations have been announced, with a subscriber growth forecast of 2.5 million by the end of the year.
However, it is not only the first quarter figures that bring the shares of the platform down.
What worries many investors is the outlook for the coming months. Netflix: an even greater loss subscribers would be in sight.
By the end of 2022, the forecast is 2 million fewer customers.
For the first time since its establishment in 1997 Netflix losing users instead of gaining.
The war in Ukraine affects Netflix
Currently the world’s largest movie, series and online content distribution company reported that the slowdown was mainly due to the suspension of service in the US. Russia, due to the sanctions that followed the invasion. Ukraine.
Only in Russia, Netflix It lost 700,000 subscribers.
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But the result was also negative. WE and no Canada, where 600 thousand was canceled signatures.
However, in addition to this element, there will be difficulties in reaching new subscribers.
But executives at Netflix’s Los Gatos California headquarters are well aware of what a physiological slowdown can be.
Netflix released its first original series in 2013. Card HouseIn the record year of 2016, he has already produced 126 original series and movies.
Yours capitalization also Nasdaq It reached almost US$300 billion (about R$1.5 trillion) in 2021.
Therefore, a contraction may even be normal.
But the fear is that this could mark the beginning of a much darker period than a few happy years.
Five causes of the crisis
In addition to the ongoing war, there are four causes of this crisis, some of which are interconnected.
1) Increase in prices
The increase in subscription prices is perhaps the most tangible and urgent, as not all customers accept or pay for this increase.
Economic difficulties caused many to resign from service as current conditions offered alternative solutions compared to a few years ago. Netflix.
2) End of the pandemic
pandemic coronavirus and quarantines have inevitably increased the number of Netflix customers.
But in recent months, with the phasing out of the health emergency, people have become less stuck at home, dedicating themselves to other activities in their spare time.
3) Increased competition
Similarly, the emergence of competing platforms, Disney+ and Amazon Prime Video, gave users more options.
Either way, the subscription cost is much lower than the cost of Netflix, whose plans go up to R$55.90.
On Disney+ the price is R$27.90.
In the example of Amazon Prime, signature Prices from R$9.90 also include free shipping to the e-retail site.
Faced with an increasingly wealthy market, competitors are breaking up the monopoly that has characterized Netflix over the past decade.
4) Account sharing
managers Netflix also blame their practices. account sharing according to negative results.
According to them, there would be around 100 million users who would use accounts shared with friends, relatives and acquaintances, in addition to the 222 million official subscribers.
A phenomenon that Netflix has already clarified will end as soon as possible.
5) Young people prefer social media
Finally, teens between the ages of 14 and 25 are spending much more time on video games and consuming content. TikTok, Instagram and YouTube before Netflix.
And this trend of younger generations is the biggest concern for the future for both shareholders and platform managers.
Because this wave will be the customer of the future. And the survival of the company will depend on them.
For this reason, Netflix has created a section reserved for games at no additional cost. However, there is still no clear diagnosis of the effectiveness of this option in terms of subscriptions.
Netflix backed out
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All these reasons combined have brought the growth of Netflix, which is now working on an urgent and timely response, to a relentless halt.
Replay content success and records as needed Squid Game (the series has been watched 142 million times), collarbone (82 million) and witch (76 million), it seems very difficult right now.
Initiatives the platform is considering include introducing new icons such as double thumbs.
Or is it the possibility of allowing subscribers to change the ending of a program? sherry.
Obviously, all this is not enough. The most urgent and possible solution to reduce the cost of subscriptions, advertising on the platform.
same founder and CEO gives Netflix, Reed Hastings, has already openly declared the possibility of this change, justifying it with the opportunity to enjoy cheaper subscriptions if the user accepts the ads.
It would not be the first instance of ads in content distributed by streaming. In Europe this is something that already happens on smaller platforms.
Finally, the expansion of Netflix in many countries also increases the possibility of production and distribution of content. customized, on the basis of geographic regions.
However, this possibility will lead to additional costs. Netflix. Everything company management doesn’t want to hear right now.
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Source: Exame
