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Netflix could lose millions of subscribers as rivals continue to pick up steam

Published On : Wednesday Dec 18 2019

Netflix could lose millions of subscribers as rivals continue to pick up steam

For years now, the value proposition offered by Netflix has been absolutely incredible. Even with a string of price increases over the years, the ability to enjoy a wildly large library of quality content for as little as $8.99 remains a remarkable deal. In turn, it’s no surprise that Netflix’s subscriber base, over the last three years alone, jumped from 86 million to 158 million.

The success of Netflix, however, spawned a new battleground for consumer attention in the media space. It’s certainly an interesting development, especially given that Netflix not too long ago was on a path towards total streaming domination. Today, however, Netflix is facing stiff competition on all fronts as companies like Amazon, HBO, Disney, Hulu, and even Apple are trying to slowly but surely chip away at Netflix’s subscriber base.

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Amid the new competition, which will only intensify once HBO Max rolls out, some analysts believe that Netflix losing a significant number of subscribers to competing services is an inevitability. What’s more, Netflix isn’t just competing on media content, it also has to contend with competing services offering up cheaper subscription plans. Disney+, for instance, is remarkably affordable at just $6.99 a month. Indeed, the launch of Disney+ has been so successful that some believe it might finish up the year with 20 million subscribers.

All that said, Needham analyst Laura Martin recently issued an investor note arguing that Netflix could soon lose upwards of 4 million subscribers amid increasingly compelling competition.

“We believe that Netflix’s premium price tier of $9-16/month is unsustainable because its perceived price/value ratio will fall over time,” Martin said in a note obtained by Barrons. International sub growth will not support Netflix valuations.”

Incidentally, Martin added that Netflix should introduce an ad-supported tier to shore up its subscriber base and attract viewers looking for a more affordable subscription plan. It’s an interesting idea, but it could backfire in the sense that it could prompt many existing subscribers to migrate down to the cheaper plan. All that said, an ad-supported tier doesn’t seem like it will ever be something Netflix puts out, as evidenced by any number of statements from company executives over the past few years.

“We, like HBO, are advertising free,” Netflix said in a letter to shareholders a few months back. “That remains a deep part of our brand proposition; when you read speculation that we are moving into selling advertising, be confident that this is false. We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction.”

Source:- bgr

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