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A look at what could be next for Netflix amid drop in subscribers

Posted at 9:11 PM, Apr 28, 2022

Less than a week after Netflix reported losing subscribers for the first time in a decade, the company's stock continues to plummet, leaving some to wonder: What's next for the streaming king?

"Netflix is not going anywhere," said Paul Erickson, research director at Parks Associates. "A lot of these services, they're not going anywhere. The market has become very accustomed to blockbuster performance out of Netflix, and this, of course, shows that they're mortal, just like every other company, and that they're also, you know, affected by larger things taking place in the market.

Erickson says that a subscription slowdown is happening for everyone as the growing market of streaming platforms is forcing consumers to be more intentional with their subscription choices.

Netflix specifically credited "robust" competition with YouTube, Hulu and Prime Video as one factor for its slowdown, but the company has been bracing for more competition since the very beginning of the so-called "streaming wars."

Though younger in the entertainment world than Disney, Warner Bros. and NBC, Netflix is still the largest player in the streaming game with more than 220 million subscribers.

The company's massive investments into original content, which started just a decade ago, helped Netflix garner and retain viewers even against the larger, more well-known legacy libraries of Disney+ and HBO Max.

But as Netflix begins to cut back on original content spending, and most notably animation, followers are keeping a close eye on what they invest in next.

"They're still innovating in other areas," Erickson said. "For example, they're expanding into offering gaming as some of their entertainment content that they're going to diverge into. And the possibility of an ad-supported tier, they're going to keep growing just in different directions than we are accustomed to seeing in the past."

The idea of ads on Netflix may seem antithetical to the company's original business model, but platforms like Hulu, Peacock and Roku have found success from them, and some experts say Netflix could too.

"Netflix will be able to reach into a larger viewership base than they would have been otherwise been able to have been able to reach using just a full-price cost model," Erickson said.

On the topic of password sharing — which Netflix previously embraced — analysts and competitors will be watching keenly to see how successfully the company can crackdown.

"There's still a lot of runway ahead for Netflix, so, you know, ask me these same questions in three years, five years from now we'll see," Erickson said.

Regardless of how Netflix fares in the long-term, their actions will likely determine how the streaming industry evolves.

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