On April 19th, Netflix reported a first-quarter net loss of 200,000 subscribers, contrary to analysts’ prediction of 2.5 million additional subscriptions. In the current quarter, Netflix forecasted the loss of 2 million subscribers.
A recent Netflix shareholder letter cited “relatively high household penetration — when including the large number of households sharing accounts — combined with competition” to be factors contributing to “revenue growth headwinds.” “The big COVID boost to streaming,” said the letter, “obscured the picture until recently.”
“The Future of OTT Aggregation” study from Interpret sheds light on consumers’ opinions towards streaming services. Data shows that 20 percent of US subscribers agree that they “subscribe to too many video streaming services,” reporting an average of 4-5 streaming services per viewer.
This new report shows that many consumers are reconsidering the value of their streaming services. One potential reason is that due to inflation, and some customers are unsubscribing from their multiple services to save money.
It is also true that the costs of multiple services add up quickly: Nielsen data suggests two in 10 subscribers pay between $20 and $30 each month, and 17 percent pay between $30 and $50.
Another reason for lower subscription numbers is that a large number of subscribers share accounts to avoid recurring costs. According to Netflix executives, an estimated 100 million households are streaming for free due to password sharing with the platform’s paying subscribers.
In a statement, Discovery’s streaming chief J.B. Perrette said, “In a complex streaming market, consumers want simplicity and an all-in service which provides a better experience and more value than stand-alone offerings.”
The findings from the Interpret study validates this claim. One-third of subscribers wish they could search for and manage their favorite content on one platform and expect greater financial value from any bundled offerings, especially if they eliminate pain points in the subscription and cancellation processes.
According to the same study: “I wouldn’t say consumers are ‘tapped out’ on content that they like but that they are considering the value that their services provide,” said Fiona O’Donnell, senior director of US Reports at Mintel. She noted that currently, if subscribers think their streaming platform is not worth their money, “they’ll be more apt to cut since there are so many other services they pay for — or can watch for free.”