Netflix is struggling to keep its newest subscribers


Netflix spends about $ 17 billion a year on new TV shows and movies. But its newer customers don’t think it’s worth the money – new data shows that Netflix subscribers are more likely to pay for the subscription service during the first month than subscribers to any of their streaming competitors.

This is a novelty and is in sync with the shocking Netflix news this spring that lost 200,000 subscribers in the first three months of the year and expects to lose 2 million more in the second quarter of the year.

These are the first subscriber losses the company has recorded in a decade, and the results have led to a huge drop in the price of its shares, a struggle to find answers and a fair degree of schadenfreude.

Data suggesting what kind of problem Netflix faces comes to Recode via Antenna, a research service that tracks consumer spending on subscription services. And it shows that by the end of April, 23 percent of Americans who signed up to Netflix had left the service within a month. There are more new subscriber cancellations than any other competitive antenna track service, including those like Apple TV + and HBO Max, which used to have higher early numbers, but have recently improved.

Netflix subscribers are now more likely to leave the first month than any other playback service

Antenna says its data comes from a panel of 5 million American consumers; the numbers don’t include free trials, or special packages and deals like Verizon and Disney have done in the past.

We don’t know yet Because Netflix subscribers are becoming Netflix cancelers and there could be several reasons. It may be due to the company’s new price hike, which went into effect earlier this year, at a time when new subscribers began to occur at a higher rate. Maybe after you’ve signed up to play a specific show or movie, customers look around and couldn’t find other things they wanted to see, or at least pay for. They may prefer Netflix rivals like Disney + or HBOMax. Maybe all of the above.

But it’s certainly worrisome for Netflix, which used to offer subscribers a lot of the best Big Media movies and TV shows, because Big Media didn’t pay attention to real-time streaming. This is over now, and some of the best performing things that were before on Netflix: TV shows like The office i Friends; Movies like the Disney Marvel franchise are now on the platforms of competitors.

Thus, Netflix’s response includes a step to offer a cheaper version of the service with ads and admission that should improve the programming that is done.

He also seems to be intentionally backtracking on his initial promise to allow viewers to see an entire season of one show at a time. In contrast, in the case of some high-profile shows, such as Ozark, has premiered the most recent season in two blocks, separated by months. He is doing the same for the new season of Strange things: The first seven chapters came out on May 27, but the last two will not come out until this Friday, July 1st.

That is, if you want to see it all Strange things season 4 immediately, you have to subscribe to Netflix for at least two months, and probably for three. You can see the logic of this in the antenna data graph below, which tracks the number of video subscribers that have been registered in the last three months. In this one, you can see Netflix acting in the middle of the group of their peers, who tend to post a new episode of a hit show every week. If Netflix can stay with subscribers a bit, its relative performance improves.

Netflix subscribers who have signed up in the last 3 months are more likely to unsubscribe than in the past

A Netflix representative declined to comment on Antena’s data, but pointed to the company’s comment in its April earnings call, where it acknowledged a “slightly high,” but also said that its ability to cling to customers “remains at a very healthy level”. . ”

The best news for Netflix, which still has about 220 million subscribers, far more than any competitor, is that the longer someone subscribes to Netflix, the more likely they are to continue subscribing. The turnover rate for the life of the company is still better than anyone, although it has also increased in recent months:

Netflix's subscriber base is more likely to drop than in the past, but competition is less likely

But staying with older subscribers won’t help Netflix as much if you can’t keep new ones. And it needs new ones to keep investors at bay. Netflix was worth nearly $ 300 billion last fall; it’s now worth $ 84 billion, and that figure could continue to fall if Wall Street believes its days of growth are over. There’s no single magic bullet for this, and the task can be even harder if a recession forces consumers to cut back on entertainment spending, and perhaps spend more time looking at free entertainment options like TikTok.

One of the reasons it’s fun to write about Netflix is ​​that everyone is a Netflix expert, because everyone uses Netflix. Then: What are you seeing? Do you stay with Netflix? Did you change it for something else? If you dropped it, what would you need to get it back? Send me a line at kafkaonmedia@recode.net and let me know.

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