New Streaming Dynamics Threaten Netflix, Subscriber Growth


It seems like a lifetime, but only four years ago Netflix was undisputed leader of the streaming subscription world, a title it held through the pandemic. That picture is changing fast.

As consumer calculus on streaming services kicks in this year and more people decide what TV experiences they will and won’t part with, Netflix continues bleeding subscribers as it did in 2020, and not replacing them fast enough versus the field of players now in its backyard.

With a competitive set now comprised of the biggest names in Hollywood ­— Disney, Paramount, Universal to name a few — Netflix must up its game or cede more of the ground it cultivated before anyone, effectively inventing streaming TV subscriptions as we know it.

Netflix’s rough road ahead is clear in Q4 2021 financials released Thursday (Jan. 20). Counting 222 million subscribers and still the market leader, the platform added 8.28 million net paid subscribers worldwide in Q4 2021, compared to 8.5 million subscribers in Q4 2020.

Looking into this year, CNBC reported that Netflix “expects to add 2.5 million subscribers during the first quarter of 2022, far below the 3.98 million it added in Q1 2021. Meanwhile, analysts had expected 6.93 million in the first quarter.”

The company reported 222 million paid memberships in Q4 2021.

In a video presentation, Netflix Co-CEO Reed Hastings said, “It’s definitely frustrating for us, the current slower growth.” The widening gulf is explained largely by competition, and from streaming expenses coming under household scrutiny in a serious way this year.

Exclusive content has been driving a seemingly unstoppable Netflix train for years, with hits like “Stranger Things,” “Squid Game” and “The Witcher” drawing raves. COVID shut down productions and crimped that pipeline of fresh content. Compounded by losing films from the majors, plus its recent price increases, and it’s turning 2022 into a suspenseful screenplay.

Snapping up series from Europe and Asia, Netflix is filling its original programming gap with shows made in non-English speaking countries. However, overdubbing and subtitles aren’t what U.S. consumers want from their streaming experience after two years of intense viewing.

Along with competition from Hollywood heavy hitters and price pressures, Netflix is perceived as falling behind the feature curve versus others — a fixable issue — but an issue, nonetheless.

Netflix is sitting on a war chest of production dollars and can program its way back to stability — provided that competition and consumer winnowing of subscriptions doesn’t interfere.

Looking for new revenue streams to bolster streaming, Netflix rolled out merch in 2021.

PYMNTS reported in November that “Netflix first launched its eCommerce shop in June with merchandise from hits such as ‘Stranger Things’ and ‘The Witcher,’ as well as branded Netflix apparel. Since then, the company has added more items from those shows, including a collaboration with General Mills on limited-edition boxes of cereal related to ‘Stranger Things,’ and has also launched products from more recent sensations like ‘Squid Game.’”

The 2021 Subscription Commerce Conversion Index, a PYMNTS and collaboration, found that 81% of all U.S. consumers are using at least one subscription service, and millions are juggling multiple channels after a slate of launches that began as COVID hit in late Q4 2019.

Get the study: The Subscription Commerce Conversion Index