Netflix: A pandemic vogue or here to linger?
Over the past few years, most evidently during the pandemic when many of us bought subscriptions while at home, the streaming company Netflix has seen dramatic shifts in the nature of it's subscription services. However, after all these years of stratospheric increase, there are signs of a plateau in Netflix’s growth, as less people remain at home.
A History of Netflix
Although now a mega-streaming service, Netflix used to work with a different process in it's early days. Prior to their shift to streaming, the founders, Marc Randolph and Reed Hastings, ran the business by mailing up-and-coming DVDs of shows to their subscribers. It had the benefit over rival companies such as Blockbuster, as there were neither due dates, nor huge late fees, which made the prospect a more attractive one for people looking for a subscription. It came in at a cost of $19.95 a month, a hefty price, but one in which you could get access to unlimited shows.
This idea took off and within just a few years, Netflix was a multi-million dollar company.
However, one of the biggest turning points in Netflix’s history, which changed the course of the entire company was in 2007. Netflix began to stream content directly on electronic devices as a side to their DVD business. Furthermore, they partnered with many different brands in 2008, to enable consumers to view content on devices such as The Xbox 360. This would soon change in 2010 when the company changed their main focus to streaming - a decision that changed the course of Netflix.
The Rise
Netflix’s stratospheric growth that has dominated the late 2010s and that stemmed primarily from the pandemic, as restrictions kept people confined inside their homes, has resulted in huge numbers of people buying a multitude of online subscriptions in order to keep them busy during the lockdown. As a direct result of this, the online streaming industry profited from this supersonic boom in subscription related services.
Other streaming services such as Disney+ almost quadrupled their subscriber count over this period, going from 26.5 million subscribers in the first quarter of 2020 to 118 million subscribers by the end of 2021 to 124.6 million as of 2025.
This surge in demand would also assert Netflix’s dominance in the industry, with its userbase increasing from 167 million subscribers in late 2019, to 204 million subscribers by the fourth quarter of 2020, adding to the giant’s brobdingnagian fanbase.
One of the primary reasons for Netflix’s phenomenal success in the past decade was its supreme attention on the user experience - unlike other companies, there are no ads whatsoever, and everything on the site is available, with no paywalls. This has resulted in Netflix gaining a unique advantage over its other competitors in the streaming industry.
The Fall
After their stratospheric rise, the streaming giant has witnessed a slowdown in recent years, with its growth beginning to plateau around the figure of 220 million subscribers. Netflix has also suffering their first loss of subscribers in the past few years in the first quarter of 2022, losing approximately two hundred thousand subscribers since the fourth quarter of 2021, followed by a further loss of almost one million subscribers by the second quarter of 2022. This change in Netflix’s fate has been reflected in its share price, which has decreased from 700 USD at the start of the year to only 200 USD by the time its second quarter statistics were released.
There have been a number of factors that have resulted in the downfall of Netflix.
Below are three of the most prominent reasons for this:
Ceasing of restrictions
While the pandemic may have facilitated Netflix’s rise, confining billions to their homes, the relaxing of the restrictions from the pandemic has resulted in the general public not being at home as much, resulting in the use of Netflix and streaming services as a whole reducing, thus more subscriptions are cancelled, and 1.51 million subscriptions were cancelled by the population of the UK in the first quarter of 2022.
The fall in their subscription count has had a knock-on effect.
2. Lack of new content
Throughout the pandemic, Netflix produced many hit shows, garnering billions of views in the process. However, as Netflix’s subscriber count has declined, many of the shows that were in Netflix’s pipeline have had the plug-pulled on them. This has had the knock-on effect of reducing interest for viewership, resulting in a repeating cycle between problems 1 and 2.
3. Growing Competition
Although Netflix asserted its dominance in lockdown, it has been posed a threat by some other companies recently: the two main ones being Disney+ and Amazon Prime Video. Disney+, for example is a rapidly growing streaming company, that overtook Netflix in 2022 after growing 14.4 million in just one quarter, while Amazon Prime Video has a huge viewership of approximately 250 million people. Both threaten to outgrow Netflix in the very near future.
Netflix’s growth has slowed down, while its competitors are catching up to it. However, recent reports for Netflix’s third quarter of 2022 reflect a growth of 2.42 million, defying expectations of a further decline. Netflix's future is hanging in the balance - the slightest market twist could seal its fate. It's twilight may yet be nigh.
Rishabh Sidana- L6G
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