Shaken by a loss of subscribers, Netflix goes on a diet

After taking a massive financial hit due to a major loss of subscribers, Netflix has implemented several measures in order to break the impasse, including the cancellation of several projects in development.

The streaming giant’s animation department was the hardest hit by the decision. Many cartoon projects, including the highly anticipated adaptation of Roald Dahl’s The Twits, have thus been abandoned. On April 19, Netflix announced that it had lost 200,000 subscribers in the first quarter and that it expected to lose another 2 million in the second, news that caused its stock market value to collapse, with a fall of $54 billion.

The drop, the first recorded at the American streaming service in more than a decade, has upset investors who are now worried about the prospects of the platform in particular and the limits of video streaming in general. For its part, Netflix attributed most of its subscriber losses in North America to a price increase. Its leaders have in this sense affirmed that they generally regain these lost subscribers over time, recalling that the company has raised its prices several times in its main markets and has continued to win customers all the same. To get out of the crisis, the company also considered implementing a crackdown on password sharing.

Indeed, Netflix could quickly whittle down the more egregious cases of password sharing, like shady websites that offer someone’s account for $1 a month. However, things get tricky when it comes to sharing with family and friends, with the streaming giant not wanting to upset subscribers who pay more so that loved ones can enjoy the service at the same time in different locations.

For now, Netflix is ​​testing a solution in Latin America where subscribers have to pay extra to give access to whoever they choose. “If you have a sister, say, who lives in another city, and you want to share Netflix with her, that’s great. We’re not trying to end that sharing, but we’re going to ask you to pay a little more to be able to share with her,” Netflix chief operating officer Greg Peters said on an earnings conference call.

However, to pay for all of its programming, which will cost some $18 billion this year, Netflix must raise its prices further. Therefore, the American company decided to introduce a cheaper version with advertising. Separately, Netflix said competition was one of four reasons for its loss of customers. Disney+, which is now approaching 130 million subscriptions, is its biggest streaming competitor in terms of subscribers. Also, competitors who don’t need to make money from streaming, namely Amazon and Apple, needn’t worry.

Both tech giants have created streaming services to sell other products, and they don’t expect to make a profit on streaming exclusively. However, Apple TV+’s growing influence on the streaming industry and the fact that it recently edged out Netflix for the Best Picture Oscar certainly didn’t make Netflix’s impasse any easier. . That said, Netflix’s troubles don’t bode well for its competitors, including Warner Bros, Discovery (owner of HBO Max), Walt Disney and Paramount Global. These companies also saw their shares tumble this week on the heels of Netflix subscriber losses, as the much-announced new CNN+ service shut down after just a month of operation. In the world of video streaming, the competition is getting tougher.