In all probability, the show must go on at Netflix. Recently, the streaming titan doled out 150 pink slips in the United States. That works out to 1.3 per cent of its global workforce. The move, Netflix said, was in response to the continuing loss of subscribers, the first since 2011. The cutbacks included the deletion of 70 part-time posts in the animation studio and cost the company a substantial loss of US S60bn in market capitalisation.
Loss of Subscribers
The Netflix response to this unsavoury debacle was not so surprising given the fact its revenues had hit a major bump. Cost-cutting had become imperative to stay afloat. The company may be toying with the idea of slapping more pink slips on its hapless employees.
Rapid loss of subscribers worldwide was certainly one push factor. In one estimate, the loss was a little over 200,000 in just three months. Only when that loss was capped by the fear of losing another two million, Netflix caved in to open the exit door for its employees. As a quick-response strategy, Netflix is expected, by end 2022, to allow its subscribers pay less for an ads-loaded version. That is a subscription-recoup strategy. As a strong supplement, the streamer could get harsher on passing-the-password.
Exorcising the Ghost
It has been reported Netflix services are being accessed now by nearly 100 million unauthorised users, a whopping 45 per cent of its subscription book. These ghost-users are undoubtedly bleeding the bottomline. Netflix need to do something very soon to plug this leakage. Adding more heft to quality is also on the cards. Netflix will surely shift its focus from huge volumes to high values. Less is more, Netflixers may say.
So, expect better seasons, more gripping series and riveting low-cost films. Slashing the current US $17bn content-creation and content-licensing tab is another must. Cut the costs and rally the revenues, that is the way to go for Netflix now. Netflix might have lost the Russian market owing to the war in Ukraine. But, it should not be an excuse for its lousy performance. Netflix has the entire Latin America and Africa for further exploration to deepen and widen its penetration.
Price it Right
In all its 24 years of existence, Netflix has been a trend-setter and a tech-pioneer in the global entertainment industry. Its success has spawned numerous copy-cats and spurned the likes of Amazon and Apple to dive into this industry. The economic truth is that right-pricing is key to success in any industry and streaming is not an exception.
More than five years ago, co-founder and CEO Reed Hastings had expressed his admiration for the password-practice. “We love people sharing Netflix,” he had said then. The words have returned with a vengeance today to maim his company’s bottomline. Hastings has been rendered speechless with shock.
In a popular Netflix show All of Us are Dead, an apocalypse breaks out suddenly after a failed science experiment in a high school. The safety of the students comes under threat and it results in a fierce struggle for survival. If Netflix fails to win this war for paying-viewers, competitively-priced quality content and merciless cost cutting, it is sure to end up being one among the dead.