Amid an intense streaming war, Netflix is struggling to keep its place as top dog, evidenced by the devastating blow the streaming giant took this quarter
The losses are smaller than expected but it still impacts the once golden streaming service. It also adds to the pressure as Netflix is increasingly under siege from younger streaming rivals Amazon and Disney as well as a plethora of smaller providers.
There are a few key areas where Netflix could suffer as its competitors work harder to produce quality programming and subscriber services.
This includes cheaper ad-supported tiers, crackdown on shared accounts, and content invest, according to analysts. If Netflix wants to retain its position, it will need to embrace change, despite a somewhat dismal year, according to industry watchers.
Analysts believe quarter results proves that Netflix must change
“The company’s subscriber stats paint a bleak, post-peak stream picture, so Netflix is overhauling its monetization strategy as it attempts to return to winning ways,” Francesca Gregory, thematic analyst at GlobalData, said in a new podcast. “It’s unwillingness to change has made it slow to respond to industry headwinds, leaving it in a position where it now needs to water down its original product to retain its market position.”
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
Indeed, Netflix’s unwillingness to change could pave the way for its rivals to win the streaming war, in a market where flexibility is key.
The US market share value of its subscriptions is expected to drop from 25% in 2020 to 16% in 2026, according to forecasts from GlobalData.
The resarch firm also estimated that Netflix’s markets may see limited growth with the streaming giant’s “US SVoD unique penetration expected to reach 87% by the end of 2022 and 92% by 2026. This is not likely to be the level of growth the streamer would like to see in such a competitive market.
A growth in subscriber numbers could come from Netflix’s late and hasty announcement of a new ad-supported tier with Microsoft. It is hoped that “this will stem the mass exodus of cash-strapped streamers,” said Gregory. “Netflix must also balance integrating ads and maintaining its immersive user experience.”
Netflix has also gradually started to make subtle changes in its heavy-handed approach to keep up with its new rivals.
“The release of season four of the hit series Stranger Things in two parts is a shift from the platform’s previous ‘all at once’ approach, encouraging both binging and high churn rates,” said Gregory. “Quality content that is strategically released will be the key to sustained viewer engagement in the future.”
GlobalData is the parent company of Verdict and its sister publications.