The rise of streaming platforms and the sluggish resurgence of audiences from traditional television and into the "watch what you want, when you want" model, were the main stories of the entertainment industry in the early 1990s, and Netflix () was the main character.
Netflix sounded like the ultimate king of the hill for a while, the name you used when it came to the term "streaming service." However, life does not matter to you.
This week, news broke that Netflix lost 200,000 worldwide subscribers, significantly missing the Street consensus forecast of a 2.5 million gain and reducing the total total number to 221.64 million.
This is the first drop in customers for the service. The company has said that it will lose another 2 million worldwide net paid additions in the three months ended June.
The stock price of the company has dropped by 35% as a result.
What happened to us?
According to industry experts who closely follow the streaming industry, there are many factors outside the company's control, such as inflation forcing customers to decline, and Netflix having to withdraw its service in Russia, causing 700,000 people to lose.
According to an expert, Netflix's difficulties come down to two main areas: increased competition in the streaming industry, and an outdated content strategy.
Netflix has a problem with content.
To succeed, every streaming platform requires two key components.
It needs a robust catalog of material to keep people interested after they've discovered the latest buzzy hit. So people might sign up for Netflix's "Russian Doll," "Inventing Anna," but they'll stick around to "When Harry Met Sally," and maybe stream a season of "New Girl."
More important, a streaming site requires buzzworthy hits that increase interest and encourage people to subscribe, at least for a month or two, so they may catch up on the most recent show that everyone is talking.
"When audience are choosing between streaming platforms that have similar quality content, a robust catalog is critical. That said, if none of the content is culturally relevant, the catalog becomes less critical," says Tina Mulqueen, the CEO of Kindred PR and the CEO of.
"Think about how many people downloaded Apple+ so they might engage in a conversation around 'Ted Lasso." 'It became more important to engage in those conversations than a more extensive portfolio that less people were talking about.'
Netflix was the master of the buzzy title that everyone had to check out. But between Apple+'s "Ted Lasso" () and Disney+'s "The Mandalorian," other services have learned to play Netflix's game, arguably better.
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"Netflix had a first-mover advantage and shifted the paradigm for entertainment consumption," she adds. "We saw this clearly with Apple's Best Picture victory."
AppleTV+ is powered by a processor.
Netflix Has a Catalog Issue
Don't overlook the significance of a good catalog, however, these things should be avoided.
In 2008, Netflix became a streaming service, becoming a huge network on the back of other company's content. While Hulu and HBO Go () were around, thus Sony, Warner, and Disney licensed their television shows and films to the streaming service.
With the same time, episodes of "The Office" and "Friends" became more popular with younger Millennials and Generation Z, unlike any of the channels' original footage.
"A successful streaming network must balance consistently producing short-term hits with producing or acquiring content that is in demand year after year, and ensure they develop a library of content that is capable of keeping people coming back to watch when it's recommended," says Keith Zubchevich. Conviva, a continuous measurement analytics platform for streaming media, has a strong foundation for developing successful streaming media.
The other major film and television studios realized that by licensing their material, they had created a major competitor, and it was just good business sense to build their own streaming services and take back their most popular titles, so "Friends" ended up on HBO Max and "The Office" on Peacock () -.
"This put significant pressure on the need for Netflix content that they used to syndicate. "When they lost so much content, they had to pay the price for their content catalog and accept the risk of being "hit or miss."
"It was a low-risk success having access to proven popular content, with extensive cataloging rapidly expanding), but original content creation is more risky. I think this impacts the brand, catalog, and revenue."
