Netflix has recently released its quarterly results. These results have proved to be shocking for the shareholders. For the first time in the history of Netflix, there has been a huge drop in the number of subscribers. According to the quarterly results of Netflix, a decrease of 250000 has been seen in its subscriber base. Netflix had said that during this period they will add more than 2.5 million new customers. But the results have come to the contrary. Today we will try to understand where is the problem in Netflix’s business model? How is Netflix preparing to get it right?
After Netflix announced its quarterly results, its shares are seeing a tremendous decline. At one point, the market valuation of Netflix had exceeded US$300 billion. Which was in November 2021. Since then, the stock of Netflix has been seeing a steady decline. After announcing the quarterly results, Netflix’s market value has dropped below $100 billion to $96.8 billion. In the coming times, the stock of Netflix may see even more decline. Netflix stock is currently trading at $215.52.
Netflix problem is increasing due to password sharing
Netflix has also suffered loss of subscribers due to password sharing. Netflix has said in its report that due to sharing of passwords, its customer base is continuously decreasing. The company said in its statement that 300 million people in the US and Canada are using Netflix through password sharing. USA and Canada are the biggest markets for the company. And here he got a big blow. Similar problem is being seen in Asian markets as well. In which there are countries like India Japan.
To overcome the problem, Netflix has now come up with the formula of password sharing charge. Under this, if you share your Netflix account password with any person, then you will have to pay an additional charge for this. However, it will be interesting to see how successful this formula of Netflix can be. The biggest problem would be for Netflix to implement this system. Because it is very difficult to know which is your original account and at what time you have shared your password?
lack of new content
Netflix is also constantly grappling with the lack of new content. Particularly regional content is rarely seen on Netflix. Netflix is an international OTT platform for Asian markets. Where only English content is available. There is a huge shortage of regional content here. Especially in countries like India, this problem is increasing continuously with Netflix. However, now Netflix has decided to invest more than Rs 10000 crore for regional content in the Indian market.
The biggest USP of Netflix is its original content. Netflix has been continuously providing premium content to its customers. However, now there is a steady decrease in premium content. Because of which Netflix’s customers are also seen going away from him. According to a recent research report, Netflix’s premium content has seen a decline of more than 50%. Which is a big blow. Apart from this, big studios are coming up with their own platform. Due to which there is also a lack of original and premium content on Netflix.
Elon Musk, the world’s richest person, has also expressed his disappointment about Netflix. Elon Musk said in his tweet that there is a constant lack of original content on Netflix.
Apart from this, the issue of censorship has also been raised by Elon Musk. He said censorship continues around the world. And its cradle is Netflix. Due to this people are facing problem in watching the original content. OTT platforms are considered to be censorship free, although now censorship is being implemented on OTT platforms all over the world. Due to which the company is also facing problem. This problem is also visible in the quarterly results of the company. Due to which new people are not able to connect to the network.
Increasing competition in the market
The issue of concern for Netflix is also the increasing competition in the market. Till now there was monopoly in the OTT market for Netflix. The audience had no other option. Now there are new platforms like HBO Max, Disney Plus Hotstar Amazon Prime Video, Hulu in the market. Which are constantly providing original content to their viewers. Whereas Netflix seems to be failing to produce new content in its studio.
Apart from this, the price is also up to 50% off Netflix. Some content creators have plans not even as high as 25%. Because of which these content creators are seen to be continuously successful. Whereas Netflix seems to be failing continuously in creating new content.
Disney Plus Hotstar and other competitors have launched advertisement based platforms. Where you have to pay a minimum charge. And you can watch any content. Whereas on Netflix you have to buy a premium account. Where there is no option to view advertisements. Because of this, Netflix plans are expensive. Because its only source of revenue is subscription. Whereas there are also advertisement based plans on Disney Plus Hotstar. Due to which they seem to be successful in keeping their plans cheap.
However, the CEO of Netflix has now said that ad-based plans can be launched in Asian markets. However, a complete decision has not been taken about it yet. However, there is a danger of affecting the user experience on the OTT platform as well. This may also affect the clean interface of Netflix. Which has been another special feature of Netflix. Netflix has always promised that its platform will be advertising free.
Apart from this, free platforms from all over the world have also come in the market. From where you can consume the content. There is also a continuous improvement in the quality of YouTube. Which is completely free. However, now the premium subscription has come on YouTube as well. But most of the content is still free on YouTube and its quality is continuously improving. Due to which the competition of Netflix is also increasing.
To compete with Netflix, YouTube is buying exclusive content rights from content creators. Because of which quality improvement is also being seen on YouTube. You can now watch the original content on YouTube for absolutely free. Content is being produced in huge quantity on YouTube and it is absolutely exclusive content. Because of which Netflix’s troubles are also increasing. Currently, the content on YouTube is not available on Netflix. However, in the coming time, Netflix can also make its platform available to original content creators. However, Netflix may face problems regarding revenue sharing.
Expensive plans a problem for Netflix
Its expensive plans are also a problem for Netflix. Because of which he is not able to reach more users. While the rest of the platforms are also providing free content on their own. Their OTT platform comes with freemium feature. In which you have to pay money for some content. While some of the content is available for free to the viewers. Due to which he is able to reach a large audience. Whereas the entire content on Netflix is premium. We see examples of this method on Disney Plus Hotstar.
Netflix plans are also becoming increasingly expensive. Especially in the USA, UK and Canada, it has continuously increased the prices of its plans. Its expensive plans are also forcing viewers to leave Netflix. However, in a country like India, Netflix has cut the prices of its plans due to competition. The OTT platform has also launched a mobile only plan for India. Which comes from ₹ 149 per month. Although his plans are still very expensive than the rest of the OTT platforms. There are also reports that Netflix may cut the plan prices for the rest of its market as well. Still comes to ₹ 799 per month. Whereas other OTT platforms can buy 1 year account at the same price. Because of which only a certain class is able to reach its reach.
Netflix is still a luxury item in a country like India. Which people like to buy only occasionally. Whereas in countries like America, Canada, inflation is increasing continuously. Due to which it is becoming an expensive deal for people to buy plans of this platform. In such a situation, if Netflix has to remain in the competition, then it will definitely have to cut the prices of its plans. Experts say that if Netflix wants to remain in the competition, it will have to cut the prices of its plans by 30% to 50% and invest for the long term.
If we talk about the basic plan of Netflix in the US, then it comes for $ 9.99, while for the premium plan you will have to spend 19.99 dollars. Which in itself is quite expensive.