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Netflix Stock Drops After Company Loses Subscribers For First Time In Over 10 Years

In the first quarter of 2022, Netflix announced that it lost 200,000 subscribers, and it expects to lose an additional two million in the second quarter. It’s the first time the company has lost subscribers in a quarter since October of 2011.

Netflix currently has 221.6 million subscribers worldwide. The news of Netflix’s losses sent stocks down nearly 25% in after-hours trading.

The reality of the first quarter was far off from what the company had previously forecasted, which was an increase of 2.5 million subscribers that would have vaulted them to around 224 million in total. Netflix’s profit was still positive in Q1, however, with $1.6 billion, while their revenue rose 10% to $7.9 billion.

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In a letter sent out to shareholders, the company noted that in the near term, they’re not “growing revenue as fast as we’d like.” The company highlighted COVID-19 and the over two-year long pandemic, saying the the growth in 2020 — due to people staying at home and streaming shows — “obscured the picture until recently.”

Several issues at play were addressed within the letter, one being that the subscriber loss can be attributed to the fact that a person doesn’t necessarily need to buy their own account – they can just password share, which has become a huge issue for the streaming service.

“Account sharing as a percentage of our paying membership hasn’t changed much over the years, but, coupled with [growth being dependent on factors Netflix can’t control], means it’s harder to grow membership in many markets – an issue that was obscured by our COVID growth.”

Netflix estimated that more than 30 million U.S. and Canadian households are using a shared password to access its content, while more than 100 million households are using a shared password worldwide. Co-chief executive Reed Hastings had previously stated the practice as being “something you have to learn to live with.”

Now, it appears Hastings may be going back on his words. The company noted those who don’t pay for Netflix represent “huge growth potential.” Indeed, Citi analyst Jason Bazinet estimated streaming services lose $25 billion due to password sharing, with Netflix accounts totaling 25% of that.

The company seems to be intent on capitalizing that potential by cracking down on password passouts through a number of still being tested methods, like forcing those who share to pay additional fees. Of course, drastic changes like these run the risk of losing Netflix more consumers.

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Netflix also blamed the plunge on Russia’s invasion of Ukraine. In response to the invasion, they — along with 400 other companies — pulled out of (and halted all future projects within) the country, which costed them 700,000 subscribers. Among other factors Netflix noted include a sluggish economy and increasing inflation.

One of the major changes that could occur from this downturn includes Netflix’s acceptance of ads. While the company has been admanted over the last decade about not utilizing advertisements, Hastings told investors that they will look into a lower-priced tier supported by ads over the next couple years.

For the service, the ongoing struggle could be quite the eye-opener as it finds itself in the midst of a streaming war. Disney+, Apple TV, HBO Max, Hulu, and Amazon Prime Video are all vying for subscriptions and revenue.

Though Netflix still ended 2021 with more customers than any of the above, Prime Video (200 million subscribers worldwide) and Disney+ (129.8 million worldwide) weren’t far behind. CNN Business estimated that Netflix’s report was likely to roil the streaming industry due to the fact that so many firms have changed their strategies to compete with the company.

Streaming Service

Quibi’s Rise And Immediate Fall In The Steaming Industry

Jeffrey Katzenberg and Meg Whitman were the two billionaires that launched Quibi, an experimental new entertainment streaming service that was meant to offer celebrity-filled fragmented “quick bite” shows; hence the name Quibi.

Woman Streaming TV Service

Meet Quibi, The ‘Short-Clip’ Streaming Service

You’ve likely heard about the newest member of the streaming service family, Quibi, already, however, what exactly is the deal with this new short-clip streaming platform? Quibi itself stands for “Quick Bites” which refers to the length of every episode on the app, as it’s designed for television viewers on the go. It initially launched on April 6th of this year, and consisted of 24 series to choose from; each series had episodes no longer than 10 minutes. 

Quibi has featured a multitude of well-known celebrity personalities in its advertisements to attract skeptical users. Chrissy Teigan, Will Arnett, Nicole Richie, Sophie Turner, Liam Hemsworth and more are all featured in original Quibi programming. The content on the platform includes comedies, dramas, docu-series, thrillers, and reality series as well, as time goes on more and more shows will obviously be produced and uploaded as well. 

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Many individuals on social media criticized Quibi for basically being a glorified YouTube-type platform that you have to pay for, however, it’s a little more complex than that. The content on Quibi is like that of any other original series on streaming services like Netflix or Hulu, in the sense that they all have Hollywood resources supporting them on the back end, so the quality is more similar to shows like “Stranger Things” as opposed to a teenager in their bedroom with a ring light. Here’s some examples of the content that’s currently streaming: 

“Dishmantled” is hosted by “Unforgettable Kimmy Schmidt” actor Tituss Burgess, who already has one of the biggest personalities in Hollywood currently. In his show, Burgess hosts a culinary competition of sorts, if you can even call it that. Contestants are to wear full-body hazmat gear as they stand in front of a canon while it blasts food at them. Contestants are then supposed to taste as much of the food that hits them in the face as they can, and whoever does the best at identifying the most food, wins. 

Mark Wahlberg produced the documentary series “Run This City” on Quibi, which is meant to be an entertaining story about the political rise and fall of Jasiel Correia II, who was the youngest mayor to run the town of Fall River, Massachusetts at 23-years-old. This series is meant to explore Correia as an individual, and begs the question, how much of his campaign was genuine, and how much of it was actually a scam? You’ll have to watch to find out. 

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“I Promise” is a series that was produced by LeBron James as a means to promote his school in Ohio. The show follows kids and teachers that are attending an experimental alternative school as they go through the traditional trials and tribulations of America’s education system, as well as overcoming other obstacles on the way. 

One of the other unique qualities that Quibi claims to separate them from other platforms is the fact that it shines a light on a lot of subcultures within our society that don’t often get explored on television. Some examples of these series include “NightGowns” which follows RuPaul’s Drag Race Winner Sasha Velour as she takes us behind-the-scenes of her cabaret performances. Other series include “You Ain’t Got These” which explores the art of “sneak culture” in America. 

Quibi currently is $5 a month for limited service, and $8 a month if you don’t want any advertisements. So, how worth it is this new streaming service? It honestly depends on preference, there are so many services out there currently that the only person who can tell you which platform to choose, is you. The best way to go about it is to really look at the content of each, and decide which best suits your lifestyle and interests, so get streaming!