Netflix’s Downfall

Over the past few months, Netflix has made the news multiple times. Stock prices have plummeted in the past six months from $677 to $190. To add to this, Netflix just had its worst two quarters: in the last quarter of 2021, Netflix’s subscriber base grew by 9% compared to previous quarters of 22% growth. And in the first quarter of 2022, Netflix lost 200,000 subscribers for the first time in a decade. 

Although it is impossible to point to one specificity causing Netflix to decline, the company  has recently been cracking down on password sharing. They also have had difficulty renewing licensing agreements and keeping media on the platform. Furthermore, they’ve raised prices in January 2022 after increasing them just over a year ago at the end of 2020. All together, these actions have led to Netflix’s downfall. 

Although password sharing goes against their terms of service, Netflix has been indifferent until recently. In 2016, the company stated that there’s only so much password sharing they can prohibit — for example, with a spouse or child — and therefore it was difficult to enforce the no-password sharing rule. Today Netflix estimates that 100 million households share their passwords; they intend to impose an additional cost for every additional user.  The company expressed a plan to test a program in South America with only two profiles per Netflix account, with any additional profile incurring a $3 fee, with the expectation to bring this to the U.S. Interestingly, 79% of people sharing an account said they wouldn’t be willing to pay for their own account if Netflix cracks down on password sharing. They may even lose customers if a group shares an account and splits the cost.

Netflix raised their prices in January 2022 and anticipates to raise prices by $3 per additional user if the South American pilot program appears successful. The company announced they did so to bring better in-house entertainment to its users, although the quality of the content has been in decline which may allow for more users to leave Netflix. The company also has been viewed negatively for canceling successful shows, including I Am Not Okay With This” and “The Society”, after just a couple seasons despite high ratings. For these reasons, viewers have been turning to Netflix’s competitors — Disney+, Hulu, HBO Max and Amazon Prime. 

One more thing to note is licensing agreements. Many users are leaving Netflix because their beloved shows and movies are no longer on the streaming platform due to expiration and a lack of renewal contracts. Production companies have started their own streaming services and stream their own content, causing Netflix to lose out on these popular movies and TV shows and thus a large fanbase. For example, Disney+  has rights to any Marvel shows on Netflix and will only offer them on their own platform.

Unless the company creates exceptional content and renews licenses for popular media, this could be the demise of Netflix.

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Photo Caption: Person Watching Netflix

Photo Credit: Pixabay