The plight of Netflix... Why is the world's most famous movie platform collapsing?

By the end of 2021, the whole world was watching the South Korean series "Squid Game" via the virtual broadcasting platform "Netflix", which made a huge jump in views for the American platform based in California, where its views exceeded 142 million people, with a total of One billion and 650 million watch hours, and it ranked first in the list of the most watched shows in 94 countries around the world within several weeks after its launch.

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But it seems that Netflix did not imagine that it would be a party to a real squid game with the advent of 2022, which seems to carry the most serious existential challenges in 10 years for the largest movie network in the world so far, which made it to the fore in economic analyzes around the world, It is exposed to a wave of major demands from its shareholders and investors that push it to take unusual measures in order to survive a major unprecedented crisis.

Pessimistic expectations drowned in optimism!

In January 2022, Netflix released a report described as pessimistic, deciding that the on-demand movie platform was expected to see a "slowdown" in the number of new subscribers during 2022. Normally, the Netflix platform has about 4 million subscribers. A new one every quarter - every 3 months - a number that has been almost constant over the past years.

But Netflix's expectations differed slightly at the beginning of this year, as it said that it would likely succeed in attracting 2.5 million new subscribers only during the first quarter of the year.

Netflix explained these expectations at the time with some reasons, such as the return to normal life with the receding of the Corona pandemic, and the end of global closures that caused hundreds of millions of people around the world to stay at home during the past two years, which led to a massive increase in demand for its platform during the past two years.

Therefore, with life returning to normal, it was only natural that the number of new subscribers to the platform would recede.

“Netflix” also indicated another reason for its expected slowdown during 2022, which is the emergence of competing companies in the global arena, as well as the emergence of regional movie platform services, which leads to a slowdown in its global expansion, but this slowdown is unlikely to significantly affect the general trend of growth that it is experiencing. The platform will achieve it during 2022, considering that it is still on top of the best movie platforms around the world, with a growth of 6000% over the past ten years, and with a total of 222 million subscribers around the world, with approximately 25 million new subscribers annually.

Well, it seems that the pessimistic forecast launched by "Netflix" at the beginning of the year was too optimistic, with the results of the first quarter of this year already appearing!

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50 billion dollars in the air

At the end of April 2022, the “Netflix” stock fell by more than 35% of its value, after the company announced its business results for the first quarter of 2022, which were surprising by all accounts, as the company did not achieve a slowdown in growth as it had expected at the beginning of the year, Rather, it achieved losses estimated at the departure of 200,000 subscribers during the first three months of the year, in an incident that occurs for the first time since 2011.

This significant drop in “Netflix” shares led to the write-off of almost a third of its market value, with a loss of about 50 billion dollars, especially with “Netflix” announcing that it expects to lose more customers, up to two and a half million customers in the second quarter of the year, making the movie streaming platform worse. It has been a year since the date of its listing on the stock market.

Despite the frustration that overshadowed investors, analysts and executives in artistic production companies around the world, with the platform announcing its growth slowdown sharply during the current year, they still hope that the company will achieve some growth indicators during the coming period, after overcoming the shock period in which many factors met. .

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what is happening?

Netflix attributes these unprecedented poor results in its history since its listing on the stock exchange to a number of “external” factors unrelated to its main activity as a streaming movie operator.

Among the first of these reasons that led to the deterioration of its results, the company previously stated that the increase in the number of its users during the pandemic period, as it was an important factor in achieving good results during the past two years, also represented a risk that many of them would withdraw after the end of the closure.

Another highly influential element in the negative results achieved by “Netflix” during the first quarter of the year, which the platform mentioned in having to suspend its services in the Russian market in the wake of the Russian invasion of Ukraine, which led to the disruption of about 700,000 accounts in Russia and some regions in Europe and the Middle East.

At the same time, Netflix lost about 600,000 subscribers in America and Canada due to the recent price increase that Netflix applied to its North American customers, all of which led to a much greater loss of subscribers than the “normal rate” of account suspensions and withdrawals. the service.

The movie "Friends and Dearest", the first Arab film produced by Netflix, has sparked widespread public outrage and protests among the Arab public – the means of communication

The third reason that Netflix explained the subscriber withdrawal crisis is the global phenomenon of sharing account passwords between users, as the platform estimated that more than 100 million families enjoy its services without paying subscription fees, using passwords from its subscribers.

In a previous message that the platform wrote to its shareholders, it said that it did not pay much attention to this matter, and was focusing on a wide penetration rate of families around the world, but the increase in accounts to this extent created headwinds for the growth of its revenues sharply in recent years.

As for the fourth reason, “Netflix” explained that the withdrawal of some of its customers is due to the increasing intensity of competition in recent years, with the emergence of virtual broadcasting platforms supported by giant companies such as “Apple” and “Amazon”, as well as giant movie companies such as “Disney Plus”, which pump Billions of dollars to develop its online streaming platform.

In addition to the emergence of many regional and local broadcasting platforms around the world, which ultimately leads to an increase in competition and a decrease in the market share of "Netflix", especially with its recent implementation of the price-raising strategy.

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Protests against Netflix content

With these negative numbers, the worst ever in ten years of the platform’s life, and with its management justifying that the reasons for these declining numbers are elements completely beyond its control, caused by changes in the markets, the crisis was also not without violent criticism towards the content provided by the platform. At the head of the critics this time is the most famous American billionaire Elon Musk, founder of SpaceX and Tesla, who is considered the richest man in the world so far, with a fortune exceeding $260 billion.

In a tweet, Musk said that he "can't stand" watching "Netflix" because it was infected with the "WOKE" virus, which he described in another tweet as "the biggest threat to civilization."

WOKE refers to the left-wing ideology that has spread around the world, which means the awareness of racism and discrimination against minorities, especially blacks, people of color, people of small religions and cultures, and women and gender issues, and its intrusion into each of its actions.

The woke mind virus is making Netflix unwatchable

— Elon Musk (@elonmusk) April 20, 2022

Over the past years, this ideology, with its intense promotion by left-wing parties around the world, has produced what looks like an inverted racism, where everything is interpreted based on skin color, ethnicity, race, religion and gender, and inserted into any context.

Musk attributed the main reason for the decline in the platform and the loss of large numbers of its users to the "Wok virus", which no one can see anymore.

Of course, this is not the first time that the “Netflix” platform has been attacked for the same reason. Over the years, the content provided by the platform has shocked many viewers around the world, and the boycott claims continue for various reasons, the last of which was in the Arab world following the movie “Friends and My Dearest.” which was described as a scandalous movie.

The platform was also subjected to global attack and calls for a boycott, following one of its films that promoted sexual scenes and meanings between underage girls.

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A plan to get out of the crisis

Despite the bleak picture of “Netflix” results during 2022, it still has a lot of playing cards, as it is still the first platform for virtual broadcasting, far ahead of most of its competitors, as the number of its subscribers around the world is about 222 million, and then comes after it in the center The second is the “Disney Plus” platform, with 179 million subscribers.

The platform also achieved during the first quarter - despite the collapse of its share value - it achieved revenues of $ 7.8 billion, and net profits of $ 1.6 billion.

Depending on its market power, “Netflix” announced a number of measures that it began to activate to counter the withdrawal of subscribers from its platform, and try to control the river of wasted money due to millions of people following its digital products without paying the subscription.

Therefore, in March, the company began restricting the sharing of accounts outside the family, and explained that this measure would positively affect its ability to invest in series and produce distinctive films for its subscribers.

The platform said that if the password is shared with people outside the family, it will impose a slight additional fee - from 2-3 additional dollars, according to what the platform has implemented in some countries - allowing friends or participants from outside the home to watch without the need to pay a full subscription.

In addition, the CEO of the “Netflix” platform, Reed Hastings, revealed one of the most strategic plans that the platform rejected for several years, which is the possibility of providing a business model that is much cheaper than the current one supported by the presence of advertising materials, and said that the platform will finish the details of this plan. during the current year.

Hastings said he's not at all impressed with having ads on the platform, and is more inclined to the current subscription-based view-versus-no-ads model, but said that this option should be there for consumers who don't mind joining the platform with cheaper subscriptions and who don't mind watching ads.

The platform also started adding new digital products, especially video games, which it started developing by acquiring game studios such as Night School and starting to develop games based on its successful series, Stranger Things.

The platform said that it aims to expand its games during 2022 to include different games that are not necessarily derived from its original works.

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In the end, what is certain is that the “Netflix” platform is facing difficult challenges that are not compared to the past years, which were its golden age. Now, the arena is teeming with strong competitors on the one hand, and a motivated audience against any increase in prices and any decrease in the quality of content on the other.

We will see how Netflix will try to overcome these crises this year, and what steps it will take to try to stay on the throne of virtual broadcasting platforms globally.

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Sources