Netflix’s price hike amid slowing customer growth raises many questions: Are we left out?
Like many Canadians under COVID-19 restrictions, Suzan Lorenz has spent a lot of time watching online streaming services during the pandemic.
Where she was once content with Netflix, with three children under one roof, she finds herself subscribing to more services than she originally anticipated when she cut her cable several years ago.
“You end up paying for more and more stuff,” she said in an interview. “It increases the spectrum of who you pay to access.”
Lorenz says she hasn’t calculated what she pays for three streaming services each month or compared that to her old cable bill.
“I probably should,” she said. “And I’ll be shocked to realize that I probably have to pay those damn cable companies.
“We’re all having a little bit of it.”
She’s not the only one starting to think so.
After more than a decade of double-digit growth, Netflix subscription additions are slowing, the company revealed in its quarterly results this week.
The fourth quarter is usually the best of the year for the company that basically invented online streaming. And while its total number of paying customers worldwide fell from nearly 214 million in the third quarter to just under 222 million, that figure is well below analysts’ expectations.
Worse still, Netflix said it was on track to add just 2.5 million new customers over the next three months, far less than the four million it added in the same period a year ago. year.
The slowdown in growth was too much for investors, who sold off the company’s stock on Friday, driving the price down 20%. For John Lynch, chief investment officer at Comerica Wealth Management, the reason for the sale is obvious: “If everyone already has Netflix, it’s hard to improve subscriber growth.”
No wonder the company raised prices again in the US and Canada this week. His costs for new content are rising, and he can’t pay for it just by finding new customers.
If free services and those based on user-generated content are included, hundreds of streaming services are now available, Hub Entertainment Research’s Jon Giegengack told CBC News in an interview.
“People’s adoption was already growing at quite a rapid rate, and then the pandemic hit and kept everyone locked in their homes with plenty of time to kill,” he said.
Giegengack says the typical consumer now pays for video content from up to six different sources. As recently as 2018, it was half of that.
“The number of sources per person has really increased dramatically since the start of the pandemic,” he said.
While the industry was growing rapidly before the pandemic and throughout it, it shows signs of maturing.
“The reality is that the streaming market has become saturated,” wrote Mike Proulx, vice president of research at Forrester. “This translates into more choice for consumers, who are increasingly concerned about the overall costs of their streaming subscriptions.”
For some consumers, limiting rising costs means being selective about what to sign up for — and for how long.
“Usually we’ll have one at a time,” said Andrew Hiscock of Mt. Pearl, NL. “We have [Netflix] for a few months, watch what we’re going to watch, maybe use Crave for a few months, then go get Amazon Prime, that sort of thing. We usually don’t pay more than one at a time.”
Others say that despite higher prices, streaming is still good value.
Torontonian Syed Raza uses half a dozen streaming services, and even at around $50 a month, he says it’s still better value than cable.
“The biggest advantage of streaming is on-demand content, and that’s something that always sucked with cable – that you had to watch something on the network program, and you couldn’t watch it as many whenever you wanted,” he said. CBC News in an email.
“The price to watch everything was never going to be $10 a month forever. I don’t know why consumers were gullible enough to believe that.”
More than costs
As costs become a deterrent, consumers are also faced with the problem of being overwhelmed by the number of options and a complicated system for figuring out how to watch them.
Giegengack says his favorite show, Yellowstone, is a prime example of an increasingly common problem. The program about a family of ranchers is the most popular show on American linear television right now, and the latest episodes air on the Paramount Network, which is owned by ViacomCBS.
“But Viacom sold the streaming rights to Peacock,” he says, referring to the streaming service owned by Comcast, owner of NBCUniversal.
So in the United States, the current season airs on a CBS-affiliated channel while the back catalog is on an NBC-affiliated service, “and you can’t watch it on Paramount+ at all, which is the service of streaming from Viacom,” he said.
To add to the confusion, all four seasons of the show are streaming on Amazon Prime in Canada.
“Something has to happen to make it simpler for people,” he said.
Giegengack says making a hit show was the hardest part, but making it available to consumers now becomes just as tricky. And conversely, despite having access to more great content than ever before, the biggest problem facing consumers today is finding a way to use streaming services “in a way that gets their money’s worth.” , did he declare.
“It’s hard to do when… there’s still only 24 hours to watch them.”