Netflix tuning in to getting ratings up
A DAY after announcing a decrease in subscribers, the incorporation of advertisements, and charges for account sharing, Netflix stock was down 35%.
Reports of decreasing subscriber numbers and a subsequent stock price drop come after months of experimentation by the streaming service leader.
In a world where the pandemic pressures that pushed content streaming into its dominant position have slowed, Netflix has been experimenting with ways to stay competitive.
As the beginning of an effort to crack down on account sharing, with Netflix claiming that its service is shared with more than 100 million non-paying households, Netflix trialled charging users in Peru and Chile an additional fee for accounts being used across multiple locations as well as introducing two-step verification when logging in to a device outside the home.
Netflix has also announced that it would be launching lower cost account options that would include adverts.
Wider consumer choice can be good for business only in a world where sites like YouTube have made people tolerant of ads. Netflix remains the most expensive service among its many competitors by almost double.
While Netflix tops subscriber rankings of streaming platforms, the peloton of Amazon Prime, Disney+ and Apple TV has been closing the gap.
It is also important to remember that these are paid subscriber numbers.
If one looks at the streaming ecosystem in terms of users, user-generated content platforms like YouTube and TikTok dwarf the viewership of these film and TV show distributors.
Netflix’s price increases over the years have had to compete with other paid services that drained its content pool and local content producers grabbing up non-US market share, and also free services that double as social media platforms.
With the biggest publishers moving their content to private platforms, Netflix has to rely more on its original shows and movies.
Alongside mixed public reception of its Netflix Originals catalogue, it has gained a reputation for having a quick trigger in cancelling original series after one or two seasons. The fragmenting of the video-streaming ecosystem has also precipitated a rise in film and TV content piracy.
Netflix’s rise in popularity (alongside the other streaming platforms it paved the way for) saw a decrease in piracy as people finally had easy, centralised access to the content they loved from many different distributors.
Now that a person usually needs multiple streaming subscriptions to meet their wants, th piracy trend has reversed as illegal streaming sites and peer-to-peer file sharing clients offer a simpler, cheaper (usually free) and more centralised service.
The factors mean we may see the wheel turn again in the cycle of bundling and unbundling of services, with the rise of an overarching subscription service that gives access to multiple streaming platforms or a compromise from the major streaming players.
Considering wider tech business trends of monopolistic control over rugged competition, it may be likely that we see larger platforms capture the market through mergers.