Netflix has unveiled its quarterly report for the period from October to December 2021, causing its shares to plummet on the New York Stock Exchange. Unsurprisingly, the number 1 in world streaming is losing ground in favor of ever more varied and tough competition.
A loss of growth in the last quarter of 2021
In total, Netflix generated $7.71 billion in the last quarter of 2021, up 16% from the previous year, and gained 8.28 million new subscribers. The platform now has 221.8 million subscribers worldwide. This is far ahead of its runner-up, Disney+, which had 118.1 million last October. Despite these figures, which seem very encouraging, the company’s stock market has fallen by 41% from the all-time high of $700 hit just two months ago.
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In its financial report for the third quarter of 2021, Netflix predicted a gain of 8.5 million subscribers for the following quarter. Not only did the platform do less than its own estimates, but it also got this disappointing result during what it calls its best year-end content offering yet, including the Don’t Look movies. Up and Red Notice, as well as new seasons of popular series such as The Witcher, You, Tiger King, Emily in Paris or Casa de Papel.
For the year 2021, the figures are not brilliant either. In total, Netflix gained 18 million new subscribers, compared to 37 million in 2020. For comparison, Disney+ increased its number of subscriptions by 60% between October 2020 and October 2021. The firm attributes these results to “ the Covid-19 situation and macroeconomic difficulties in several parts of the world “.
It has thus revised its predictions downwards for the first quarter of 2022 and forecasts only 2.5 million new subscribers; analysts predicted an additional 7.25 million, which explains in particular the significant fall of Netflix on Wall Street.
Disney+, Netflix’s biggest competitor, is growing. Photography: Mika Baumeister / Unsplash
Netflix’s strategy may not be the right one
The slow growth of the streaming service can be explained by various factors. It is indeed normal that it struggles to gain new subscribers in North America as it is already widespread there. In order to circumvent this problem, Netflix announced a new increase of 1.5 dollars per month for its subscriptions in the United States and Canada, and multiplies the new content sometimes to the detriment of quality… A solution which could push certain users to leave the service.
Reed Hastings, co-CEO of Netflix, has also admitted that the competition ” affected » the growth of his business. ” They seem to be coming of age. They keep raising their prices, and now, in order to maintain a level of subscribers that they have, they’re continually adding more and more new content, and content is inherently a hard-to-predict business with spikes and hollows says Michael Nathanson, media analyst at MoffettNathanson, to CNN Business.
While Netflix once occupied a huge market place in the streaming sector, its rivals are now more numerous and offer very popular and quality content: if the reputation of HBO series is well established, Disney + offers series and films from franchises of unrivaled popularity. For its part, Amazon Prime Video is preparing to sign a huge success with the spinoff series of The Lord of the Rings, which is scheduled for release at the end of 2022.
2022 does not look extraordinary for the platform
For the time being, however, Reed Hastings assures that he and his teams remain ” calm “. Netflix is still the most popular streaming service in the world, and despite its disappointment on Wall Street, it continues to grow. The firm also assures that its new productions planned for March, like season 2 of Bridgerton and the film The Adam Project, should allow it to gain more subscribers in the second quarter of 2022 than in the previous one.
Nevertheless, it seems that a change of strategy is necessary for Netflix in the face of the emergence of its competitors. Moreover, the company is already seeking to diversify through video games, and it could be wise for it to ” begins to aggressively address growth in developing markets like India or Southeast Asia, assures Michael Nathanson.
For now, Netflix’s 2022 looks pretty hazy, and it wouldn’t be surprising if its growth continued to decline. It remains to be seen whether the diversification of its activities, as well as its heavy investments in new infrastructures will enable it to recover.