However, after several years of success, last year marked the first time in a decade that Netflix stopped growing, and even more worryingly, started regressing. With so many things transpiring near the end of the last year, one can only begin to wonder, what’s in store for Netflix and how did we get here? Netflix has been riding an upward trajectory for quite some time now, and it hit its peak during the pandemic. With millions of people confined to their homes, binge-watching TV shows was one of the things to do. But, as COVID-19 restrictions died down and people started returning to the real world, the need to watch shows and films from home started to decline. Even though a drop-off was expected, nobody could predict the souring of public opinion Netflix sustained. In the current capitalistic consumer-driven society, growth is the ultimate objective for any business to satisfy investors, and Netflix dropped the ball. For the first time in a decade, it recorded a net subscription loss in the first half of last year. The streamer lost 1.2 million subscribers in the first six months of 2022, which was a tough blow and it further stymied the platform’s growth in Southeast Asia. The loss was especially pronounced in the US and Canada, where Netflix lost over 650,000 subscribers between January and March. While Netflix remains the biggest fish in the tank, with over 220 million subscribers in 190 countries, Disney+ has caught up with 152 million subscriptions since it was launched in 2019. Netflix managed to rebound in the second half of last year and is still the most widespread streaming service, but the gap between it and the competition is closing. With Disney+ recording growth of 14.5 million subscribers in the final quarter of last year alone, it’s time to look at some of the reasons for Netflix’s decline, which has been especially felt in Western culture.
Is there a problem with Netflix’s pricing?
Netflix is too expensive. There’s no way to sugarcoat it. You can blame the pandemic, the war in Ukraine, a global recession, and rising inflation but Netflix has consistently increased its prices over the years. If streaming platforms are becoming the norm and replacing cable TV, anything less than a “premium” subscription is unacceptable for many households. The most expensive Netflix subscription tier, which offers four screens of play, a must-have for most families, as well as 4K content, is priced at $20 a month. Compare that to it main rivals in the North American market and the issues start to make sense: The closest Netflix can come to its competitors in terms of pricing is with its middle tier at $15 a month, but that knocks out the 4K content which most of the other services provide, and also takes you down to just two simultaneous screens. “Basic” at $10 a month doesn’t even have HD content, which is crazy to think that someone is using a display that doesn’t support 1080p in 2023.
A decline in content production and quality
At the end of the day, content quality is a tricky topic because it’s heavily subjective. Winning awards and racking up streaming hours help provide a bit of context but every streaming service caters to a target group. Better yet, most of the competing streaming services are keeping their content libraries exclusive and away from Netflix. This cuts down on the streaming giant’s once-uncontested catalog composed of third-party shows and first-party projects (called Originals) as it’s effectively forced Netflix to rely on the success of its own production. This is an area that Netflix isn’t as familiar with compared to Disney and Paramount, both of which are proven studios that have produced first-party content for decades. To make matters worse, Netflix appears to have a penchant for pissing off consumers by canceling shows. Not only does it prevent viewers from connecting to a story, but it also fuels the unhealthy binge-watching culture. Case in point, Netflix canceled Resident Evil after just one season and Space Force didn’t get renewed. More successful shows, like 1899, were also discontinued, which is rather baffling,
Netflix is eaten by the culture it developed
From introducing a new ad-supported subscription tier to fighting account sharing and raising prices, Netflix might not be sabotaging itself, but falling victim to the environment it created instead. Slow-burner “mystery box” shows with shocking endings like smash hits Lost, Breaking Bad and Dark might have been the ideal formula to keep viewers glued to their seats till the very end, but that was then and things are different now. Thanks to the binge culture Netflix introduced, shows need to establish the plot at a relatively blistering pace. Netflix’s recent success stories like Squid Game and Wednesday try their best not to lose the attention of viewers. While some might enjoy the scene setting and storytelling mode of a series, that’s not the general feeling this year and the numbers back that up with Digital I, a UK-based SVOD data analytics company, releasing preliminary data showing there’s a huge viewership drop-off between episodes one and two of 1899. Statistics like these show that many people ditched the show early on, with a measly 32% of viewers in Europe and North America finishing the entire series. Their observations suggest that if a show is struggling to break a 50% completion rate, it’s going to face difficulties getting renewed.
What’s next for Netflix?
Renewing Wednesday for a second season is a great way to start the year but it’s far from enough to keep its audiences engaged for the long haul. Fortunately, Netflix has a handful of upcoming must-watch shows coming out soon, including Season 4 of You, which recently got its first official trailer. However, Netflix needs to do more, especially with Squid Game not expected to return until 2024 if not 2025, and Stranger Things Season 5 still in pre-production. We can only assume Wednesday is going to take its time with its return as well, if only to avoid burning audiences out with too much of Jenna Ortega’s portrayal of the iconic character.
