Leadership at Netflix has been in shambles over the last few days because, while they had projected significant subscriber growth, they closed out March with a decline in membership for the first time in over a decade. They just can’t seem to figure out why their loyal customers are walking away, and they’re throwing a serious hissy fit over it.
But for subscribers, the reason is pretty obvious. Much of Netflix’s customer base is budget-conscious, and the company’s growing greed is starting to catch up to them.
Way back in 1997, Netflix started as a DVD subscription service as a way to disrupt the movie rental business. In 2007, the company transitioned to a streaming service, empowering millions of people to ditch their overpriced cable packages for something more reasonably priced.
Now, the very company that shook things up by giving the people what they wanted — a convenient and affordable way to watch movies and TV — is aghast because it turns out, that’s still what the people want. But Netflix is no longer offering it.
This is the free market at work.
In the first quarter of 2022, the streaming platform lost around 200,000 subscribers (a drop in the bucket given they have around 222 million subscribers) and they anticipate losing another 2 million in the second quarter. This is the first time in more than 10 years that Netflix has reported a loss in subscribers.
But, we’ve all been sharing passwords for more than a decade. And there’s no way that the smart people over at Netflix don’t factor in ebbs and flows for things like Covid and the war in Ukraine when they come up with budgets and projections. No, the catalyst for this loss of subscribers is not external. This comes down to Netflix’s greed and overconfidence.
From a customer perspective, at $15.49/month for a standard plan, Netflix has become rather expensive compared to its competitors. In contrast, ad-free HBO Max is $14.99/month, Disney+ is $7.99/month, ad-free Hulu is $12.99/month, Peacock Plus is $9.99/month, and Apple TV+ is $4.99/month. Not to mention, anyone who has an Amazon Prime membership also has access to Prime Video (which is otherwise $8.99/month).
Part of the reason Netflix costs so much more than other platforms is that it’s been around the longest and the company has been slowly increasing prices over the years. Back in 2011, a standard membership cost $7.99/month, and today it’s nearly doubled.
Yes, the slow, consistent rise in price has been annoying for long-time subscribers, but since so many of us share passwords with close friends or family members, it’s been easy to shrug off the increases as premiums for this practice. We’ve been doing it for years and the company is well aware of it, so in this regard, it makes sense that they’d charge us a bit more to make up for the loss. And, as long as Netflix was letting us get away with it, charging us an extra $1/month every few years hasn’t been worth walking away.
However, Netflix’s CEO, Reed Hastings, recently told the company’s investors that cracking down on password sharing has become a high priority for the company moving forward. There’s no formal plan of action yet, but the rumor is that there will be an upcharge for additional profiles within an account (which is just stupid on so many levels, but here we are).
Oh, and it gets worse. They’re also considering adding commercials to some membership tiers as a new way to generate revenue.
When you put all of this together, you end up with an overpriced streaming platform that consistently raises prices, that won’t let its paying members share passwords, and that is suddenly introducing commercials after more than a decade. It’s becoming everything it once tried to fight against.
To get away with this they’d need to have some spectacular content that subscribers can’t get anywhere else. But as beloved as some of Netflix’s movies and series are, their original content is not substantially better than other platforms’. For every Stranger Things, there’s a problematic Dave Chappelle special to go along with it. Plus, you can’t even stream a lot of the familiar classic TV shows that Netflix once housed, like Parks and Rec or Friends, because they’ve all moved to other (less expensive) platforms.
So, at this point, what exactly is Netflix offering that its competitors aren’t that’s worth the monthly upcharge?
It’s clear that Netflix’s high cost combined with their mediocre content and their regular price increases are exactly what’s causing a lot of members to unsubscribe from the platform and switch to more affordable competitors. After all, that’s exactly why we ditched our overpriced cable packages to switch to Netflix all those years ago, right?
No matter how baffled Netflix’s leadership seems to be by its loss in subscriptions, this really isn’t a head-scratcher. Though it’s amusing to watch a greedy company get taken down by the same disruptive business model it created in the first place.