Netflix has lost 2 lakh subscribers in the first quarter of 2022. This is the first time in the last ten years that the OTT platform has seen a decline in the number of subscribers. The last loss in subscriber base happened in 2011. This could be just the beginning as the company has predicted another loss of 20 lakh subscribers in the second quarter of the year.
The immediate reaction to the current fall in the number of subscriptions was that the company faced a market cap loss of $59 billion or, in other words, Rs. 4.5 lakh crore on April 20. Viewed differently, the market cap was hit by Rs. 2.25 crore per subscriber lost!
The company is taking quick measures to change some of its long-standing rules. For instance, it will introduce a cheaper, advertising-supported option for subscribers in the next couple of years. Obviously, the biggest OTT platform has realised that it doesn’t pay to have an ads-free service because it becomes difficult to sustain such a huge service without the support of advertising revenue and based wholly on the subscription revenue model. Even before introducing the ad revenue model as an alternative, the company will start cracking down on subscribers sharing their passwords.
The platform has likely realised that the surge in subscriptions during the Coronavirus pandemic-induced lockdowns is, to an extent, being reversed as people are quitting the service post-lockdown. People had all the free time in the world during the last two years because of the lockdowns, but with other expenditures like travel, conveyance, spend on comforts and luxuries now having resurfaced in people’s lives, it is OTT viewing and, therefore, platform subscriptions that are the early casualties.
Is the exhibition sector, the death-knell of which OTT platforms like Netflix, Amazon, Disney+ Hotstar, etc. were supposed to have sounded, having the last laugh? Your guess is as good as ours!