Can Netflix walk out of this mess?

Netflix has lost close to 1 Million more subscribers in Q2. That’s being celebrated as good news. The streaming giant was projected to lose between 1.5 and 4 million subscribers according to analysts. Investors seem happy with trading up by up to 7% since the report.

In the first quarter, the company lost 200,000 subscribers. The aftermath of that wave saw them shift strategy in a bid to curb what they call “Password Sharing”. They also mentioned the plan for an ad-supported tier which would be more affordable.

The Mess:

The Netflix dream was simple: build an online library where people can watch Movies and TV shows. But then everyone can do that. Instead of studios licensing content to be available on Netflix, they can build their own platforms. That’s why we now have Disney+, Apple TV+, Amazon Prime Video, Showmax, HBO, Hulu, Discovery, Paramount and so many more.

What happens now? Each of these platforms has their original content. Each of them wants you to pay a monthly fee.

So each platform is competing to get as many subscribers as possible. And how do you achieve this? By creating great shows.

Netflix has been doing that for a while now. They’ve poured money into huge shows requiring filming across different parts of the world, and working with big studios and personalities. This requires huge budgets.

Their problem is this:

• They’ve ended up canceling many shows, angering paying subscribers leading to cancelation.
• Their plans are weirdly done, making them the most expensive platform. Their cheaper plans don’t offer what other streaming platforms do as standard.
• Competition looks better with companies like Disney taking away certain shows from Netflix. For example, why pay for Netflix when every Marvel show is on Disney+?

These are the issues that are making Netflix lose customers. But the company has been keen on blaming other things, and offering solutions that may never work.

Pay more to share passwords:

With the crackdown on password sharing, the streaming platform will require people using an account to be in the same household. That’s irrespective of whether they’re paying for Premium or Standard and can stream consecutively on different devices.

Should you want to share passwords with someone from a different household, the company is now testing the option to pay an extra amount of up to $2.99. This is being tested in 5 South America countries including Argentina, El Salvador, Guatemala, Honduras and the Dominican Republic.

I am curious as to how such a feature will work in Kenya and other places. Here’s why:

1. Netflix plans are expensive. So people pull resources to pay monthly fees together. Most of such people will get the Premium Plan to allow more devices and up to 4K Streams.
2. Most people who pull such resources don’t live together, and never will. If they cannot access Netflix because they’re not of the same household, then they would rather not pay.

The solution to this seems simple from a customer side: Fix the subscription plans to have something cheaper that individuals can afford, with up to 4K streams and option for multiple downloads. Just like Prime Video yeah?

Ad-supported Subscription Plan:

This week, it has been announced that Netflix will be working with Microsoft for an ad-supported plan launching in 2023. This is the solution Netflix believes will get them out of the mess by allowing people to pay less. Sounds good, yes? But have you seen YouTube nowadays?

It’s not clear how the ads will be implemented. It is also not clear what sort of ads will be placed and at what points they will be shown.

Platforms like Hulu, HBO Max, Discovery+ and more have ad-supported tiers. So this isn’t something new. For Netflix however, it is another departure from their previous stance on ads.

The problem is this: the ad-supported tier won’t give you the full library. So why pay less, see ads but not access everything?

No way out:

With everyone jumping onto the streaming hype, it’ll be hard to have one platform to rule them all. (Though, you never know what will come up in the coming years.) For now though, Netflix will continue to lose subscribers until they reach a plateau point. That’s provided they don’t mess things up for themselves.

I don’t think the password sharing approach or the ad-supported tiers will pick up. Instead, they may alienate even more users, leading to more cancellation.

On the other hand, the other streaming platforms will continue seeing growth until they also plateau. This is because they have more countries to expand to, and being new, they’re also exciting for people to try out.

In the longterm, what we will be seeing is huge shifts in paying subscribers anytime there’s a big show on the different streaming platforms. For example, ‘The Boys’ on Prime Video has come to an end, so many of us are now no longer subscribers until another big show launches. The only way to keep customers is to churn out as much good content as possible every other month. But will that be sustainable?