Be careful what you wish for, because wishes sometimes come true. Five years ago, immersed in the conviction that growing viewers was the fastest path to success, Netflix encouraged its subscribers on social networks to share passwords to access their content. It’s a common formula: companies like Amazon have built their expansion on low prices, with the premise that it’s not a big deal to lose money up front if you get loyal customers later in return. platform streaming now discover a cruel reality behind that strategy: there are 100 million homes that watch their series and movies for free using the passwords of friends and family. And while that’s happening, your ability to attract new subscribers stalls. The result has become evident this Wednesday: the company has plummeted around 40% on the stock market after presenting its worst numbers in a decade: for the first time in that time it lost subscribers, specifically 200,000. And the expectations are not good, he calculates that he will lose another two million in the second quarter.
The California-based company has seen some $60 billion worth of stocks disappear just hours after releasing those numbers. And after pointing out those who use its services without being customers among the culprits, there are not a few who now remind Netflix of those times when it came to share a message on Twitter saying “to love is to share a password.” There are also those who invite her to look more within herself for the roots of her problems: specifically in the quality of her content and in rates that have risen in price.
Instead, Netflix points out that the common key phenomenon is making its progress in some markets very difficult. In the US and Canada, 30 million of the 100 million households that do not pay are located. And although in a letter to shareholders the firm acknowledges that the percentage of shared accounts has not changed much, now the situation is becoming more visible because the wave of unbridled growth that propelled it during the pandemic lockdowns has ended, when one of the The greatest entertainment to kill the time of millions of citizens around the planet was rummaging through the Netflix catalog.
With restrictions eased and the freedom to dine out, travel or go to the movies restored in much of the world, the competition for time becomes fiercer. And that’s not just Netflix. 2022 has seen other major stock market cataclysms like the one in Meta. The owner of Facebook, Instagram and WhatsApp said in February that Facebook lost users in the last quarter of last year, something that had not happened for 18 years. And the disbandment of investors was not long in coming. Others, such as the popular Zoom videoconferencing application, have long carried the stigma that its glory was temporary and the result of the pandemic: in one year it has lost two-thirds of its value on the stock market.
Netflix is very close to imitating it. 60% has been left in 12 months. Their previous quarterly results were already received with falls of 20% due to the slowdown in subscribers they were collecting. Now it rains on wet. And its competitors do not seem to have reason to celebrate: Disney titles fell more than 4% this Wednesday, and those of Warner Bros Discovery, owner of HBO Max, more than 5%.
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Precisely the proliferation of platforms is the other great reason that Netflix uses to justify its crisis. Disney +, HBO Max, Apple TV + or Amazon Prime are just some of the names that are fighting for the subscriber’s money in an increasingly overloaded sector. Sometimes, users choose to contract several to have access to more content, but in an environment of high inflation that reduces savings, this possibility loses its appeal, and it is even possible to do without some of the subscriptions to focus on just one.
Now, with Netflix hovering around a valuation of close to $100 billion, a far cry from rubbing shoulders with the biggest US companies like it used to, the question is whether the company will be able to resume the cruising speed that put it in place between 2010 and 2010. 2021 as a clear example of success. The 221 million customers it still has are an important base from which to operate. And as CEO Reed Hastings announced, ads can be a new source of revenue.
Last year, the company also tested two-factor authentication before users signed in on a device other than the account owner. But it seems clear that it will have to go further to try to monetize users that do not report income, one of the leaks that it will seek to cover to recover the lost energy. Love is no longer a shared password.