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Netflix (NFLX) on Tuesday morning released the transcripts of its first-quarter earnings. They have lost 200,000 subscribers in the last three months and are expecting to lose 20,00,000 more in the next quarter. Since the announcement, Netflix's shares have tanked 35%.
Yes!! No one is chilling anymore.
COVID's taking off 👋
Netflix added 36 million new subscriptions (not subscribers) in 2020. They were able to add 18 million new subscriptions in the year 2021. OTT platforms were the primary way of recreation for the all-closed world. It was the peak in their subscribers count.
But now priority's been changed, no one is under house arrest.
People in these semi-inflated situations have started curbing their non-essential subscriptions, and Netflix is facing the heat.
The other reasons that Reed Hastings (CEO of Netflix) blamed for the subscriber decline were the competition from other OTT platforms and password sharing. Netflix runs only on a subscription fee. We don't see any 6/10/14/30 seconds ads killing the moment in between. Not having any other sort of revenue generation makes the tariff more expensive. An annual subscription to Disney plus Hotstar is ₹1499, Amazon Prime is ₹999 and Netflix is ₹7788. The company also estimates that around ten crores of households are streaming Netflix using the shared password. Netflix has ignored the password sharing practice because it is not a loss-making proposition, you make people addicted to your product and then you find a way to somehow generate money from that (Microsoft did that back in the 2000s with Windows. We all downloaded/installed their software unethically but now most of us are addicted to it). People at Netflix have admitted that password sharing has amplified its reach and growth.
Recovery Plan
“I know it is disappointing for investors, and it is for sure”- Reed Hastings said on Tuesday morning. To compensate, Netflix is aiming to roll out some advertisements on the platform. People will now have to skip ads here as well. Also, they are trying to convert their so-called free subscribers to paid subscribers. How?? No one knows.
Netflix use to compete with human sleep once, and now they are looking for advertisers to show ads on the applications.
Tables have turned around!!
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Ciao
Nishchal from Team Rubric