Netflix faced a sharp drop in subscriber count in 2022. Many have been wondering the reasons why Netflix is losing subscribers unexpectedly. According to reports, net subscribers who left Netflix have reached 200,000 globally. The company expects to lose a further 2 million within the next 3 months. After Netflix announced these numbers, its share price fell by 35% on 20th April 2022. Its market value also shed 55 billion USD.
The streaming giant has blamed some factors for this decline. Here are 5 key reasons that played a part in Netflix losing its precious subscribers.
Netflix is Losing Subscribers because of War in Ukraine
Netflix is losing subscribers because of its stance on the Russia-Ukraine war. The streaming service joined several other countries worldwide in protest, ending its business activities in Russia. After stopping its Russian operations, the company claimed that it lost around 700,000 subscribers.
Increase in Subscription Fee
As per popular opinion, Netflix is losing subscribers due to the recent price hike. Netflix has been sharply increasing its monthly subscription fee globally. The basic plan, which was 7.99 USD till 2017, is now 9.99 USD per month. The service’s standard plan now costs 15.49 USD per month (the 2017 price was 10.99 USD). And the fee of the Premium plan reached 19.99 USD from 13.99 USD in 2017. The company claimed that it was happy with the results because the hike brought in more revenue. On the other hand, after facing a new price, many subscribers cancelled their Netflix accounts. It reportedly lost 600,000 subscribers from the US and Canada alone.
For many years Netflix has been letting its users share passwords with other users. It allows several people to watch content without actually paying the fee per person. One subscriber paying for the service while 10 more enjoying it for free is not ideal for business. Netflix reported that around 100 million households access its services around the world through password sharing. Now the streaming giant is experimenting with a crackdown on password sharing. Netflix is losing subscribers who are not happy with this decision. In some countries, it asked subscribers to pay 3 USD extra per month if they shared their password with people outside their household.
Ease of Coronavirus Restrictions
The easing of coronavirus restrictions has been great news for humans, but for Netflix, it proved to be a bad one. A lot of companies are adjusting to the end of the “pandemic boom” that highly benefited digital product companies like Netflix. Many people subscribed to Netflix in a period of uncertainty because they could not continue most of their habits due to lockdowns. After the ease of restrictions, they can breathe fresh air outside and might not need a digital distraction anymore. There is plenty of stuff to do other than binge-watch TV all day. Netflix is losing subscribers due to those people probably going back to their preferred activities. The graph below shows the rise of Netflix followers during 2019-2021 and then a steep fall during 2022 as COVID restrictions decreased.
Netflix is losing subscribers because of intense competition. The pandemic drew many to OTT (over-the-top) TV services and subsequently inspired many companies to develop their own streaming services. The list of competitors is long and growing with way lower prices than Netflix. This list includes Apple TV, Disney+, HBO Max, Paramount, Hulu, Amazon Prime, Peacock, etc. Even Bollywood actor Shah Rukh Khan has announced to release his own OTT platform named SRK+.
Despite so many other streaming services on the scene, Netflix still retains its position on the top. It is only facing a little competition; otherwise, it still has 221.64 million subscribers, the world’s largest subscriber base of all streaming services.