Faced with the loss of its subscribers, the streaming video platform is officially considering offering cheaper formulas financed by advertising. But it will probably take more than a year to enjoy it.
Bad times for Netflix. For the first in its history, the famous streaming video platform has lost subscribers. As explained The Express and The echoes, the SVOD (subscription video) service thus has 200,000 fewer customers in the first quarter of 2022 than in the last quarter of 2021 – and even 600,000 in its native lands, in the United States and Canada! – while he hoped to recruit 2.5 million more. A historic underperformance – especially after the record rise during confinement – which led to a spectacular 23% drop in its stock market share. And which will force the company to review its economic model, visibly more suited to the current market, to meet demand and reconnect with its insolent growth.
Netflix faces tougher competition
The loss of Netflix subscribers has three main causes. First, the company is said to have lost some 700,000 customers in Russia in the space of a few weeks, following the suspension of its service as a sanction for the war in Ukraine. Without this measure, it was counting on 500,000 additional subscriptions compared to the previous quarter, it underlines in its press release. Then and above all, while it has long been almost alone in this nascent sector, the video platform has had to face increasingly tough competition for several years, with the proliferation of streaming services and, above all, the arrival of behemoths like Disney+ or Amazon Prime Video, which have gained solid market shares in a short time. Finally, to continue to produce original content – its great specialty which has contributed to its popularity – Netflix has constantly increased its prices all over the world: thus the basic subscription, with a single stream in SD ( standard definition) is now at 8.99 euros per month in France – against 7.99 euros when it arrived in 2014 – while the top-of-the-range formula, with four HD or 4K streams, today reaches 17.99 euros against 15.99 euros in October 2021.
Consequences: many customers – acquired or potential – have gone elsewhere and many are now indulging in account sharing to reduce costs, either between relatives or with strangers, via specialized platforms (see our article). A practice against which Netflix tries to fight, by proposing an adapted offer via the addition of additional profiles for a fee, which is very likely to have a negative effect in the long term on its subscriber base, especially if the competition authorizes it. or tolerate it at no additional cost…
A cheaper Netflix subscription thanks to advertising?
Hence the surprise announcement of a paradigm shift. While it has totally refused to do so since its inception, Netflix is indeed considering integrating advertising into its content: a new source of income that would allow it to offer cheaper subscriptions – while maintaining advertising-free formulas – , in order to align with the competition and curb the flight of subscribers. However, this “revolution” will not happen overnight because the platform will have to set up an advertising agency worthy of the name while adapting its service to the integration of spots. And, as pointed out by many observers such as The Vergethe offer with advertising should not appear for at least a year, after tests in different regions, as the company does with each evolution.
If this development seems both desirable and inevitable, it will once again raise the question of profiling. Indeed, by knowing exactly who is watching what, thanks to its user profiles, Netflix knows the tastes of its subscribers perfectly, which will allow it to very precisely target the advertisements broadcast with its content. An undeniable asset for offering its services to advertisers. But that may not be to everyone’s taste, especially at a time when the tracking and confidentiality of personal data are very sensitive subjects…