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April 27, 2022

Netflix must reign in the streaming wars to stop bleeding subscribers

By MarketLine

In its first quarter report, Netflix stated that it lost 200,000 subscribers during the first three months of the year compared to the final quarter of 2021. This loss is the first in a decade for Netflix. It comes at odds to the surge seen throughout 2020 amid pandemic induced lockdowns.

Households are being forced to tighten their budgets as the cost-of-living soars rapidly. As this crisis worsens, consumers will increasingly sacrifice luxuries such as Netflix.

Figures from insurance company MetLife suggest over eight million adults in the UK have cancelled some monthly outgoings in response to rocketing bills.

With the influx of competition to the streaming market over the last two years, we are likely to see consumers forego multiple subscriptions. As consumers shop around for their favoured service, Netflix must beat its competition if it is to recover.

This will be no mean feat, with the likes of Disney+, Amazon Prime Video, Paramount+, and HBO Max flooding the market.

Original content key to Netflix success

Investing in original content will continue to be key for Netflix’s recovery. It has seen huge success with content such as Squid Game, The Queen’s Gambit and Bridgerton. Continuing to offer sought after titles will stand the company in good stead to ride out the difficulties it is currently facing.

The company will also look to leverage the popular content it already offers by offering new series of franchises such as Stranger Things, Ozark, and Bridgerton.

International expansion could mean a return to subscriber growth

With streaming markets in North America and Western Europe becoming increasingly crowded, international expansion could prove shrewd.

Given the untapped potential of areas of Asia, Latin America, Middle East and Africa, there is huge opportunity for the company. Continuing to invest in global content, such as was seen with Korean-produce Squid Game, would be beneficial to this strategy.

Finally, a move towards offering its original content to third party platforms could help to bring in extra revenue. This is something that the company is exploring.

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