Netflix is in a tough spot.
They made headlines this morning for their first decline in subscriber numbers in 10 years. They forecasted Q1 subscriber growth of 2.5 million, but actually lost 200,000. Even more striking is they forecast losing another 2 million in Q2.
They’re citing saturation in key markets, as well as mounting pressure from the likes of Disney, Apple, and Hulu, as being the reason for the decline.
However, what was most shocking to me was the 100 million people that watch Netflix by borrowing credentials from other users. That’s huge when their total subscriber base is 220 million.
To sum up the situation, Netflix has lost about 65% of its market value within the last 6 months. A staggering decline.
To combat the above, Netflix is considering clamping down on borrowed credentials, and is also looking to bring in a lower priced ads tier to their platform within the next year or two.
I worry it’s too little too late for Netflix. I don’t see how the above two responses will close the gap in revenue nor growth expectations.
It’s going to be interesting watching all this shake out over the coming year or so.