With Its Shares Dropping by 20%, Can Netflix Withstand the New Competitors?

The latest data released by the global broadcasting giant Netflix has stoked investors' fears about the possible decrease of the network's streaming boom that peaked during the Coronavirus lockdown conditions two years ago.

The number of new subscribers to Netflix is ​​expected to decline in the first quarter of 2022 for the first time in more than 10 years, in light of increased competition from newer networks such as Disney+, HBO Max, and Amazon.

The Guardian newspaper pointed out: “Netflix expects to report the lowest number of new subscribers in the first quarter in more than a decade, as competition from newer rivals such as Disney+ grows.”

It added: “Netflix expects to add only 2.5 million new subscribers globally in the first three months of the year, well down on the 4 million new sign-ups in the first quarter of 2021, and almost half the number expected by analysts.”

 

Sharp Decline

The New York Times reported that Netflix stock dropped when the giant company predicted subscriber slowdown. On January 20, the streaming company announced that in the last quarter, it had 8.3 million new subscribers. However, it predicted only 2.5 million additional users in the current quarter.

The sharp decline in Netflix subscribers has many reasons. But the most important basis for it seems to be related to the fierce competition that has increased significantly in the last few years, with Disney+ and HBO Max making significant progress into the streaming field.

In January 2022, Warner Media revealed that HBO Max had exceeded the number of new subscribers it expected, growing to 73.8 million customers by the end of the year.

The research firm Digital I elucidated that Netflix’s most popular content was mainly licensed from Disney. It estimated that Disney content accounted for about 12% of the viewing in the first quarter of last year. It seems evident for Netflix to lose many of its users after removing nearly all of its top-ranking Disney titles in the UK.

 

Strong Competitors

Netflix recognized that the streaming wars against competitors such as Disney, Apple, HBO Max, Peacock, and Amazon are intensifying.

In the UK, Netflix is struggling to keep as many as 750,000 UK subscribers with its rival Disney taking exclusive control of most popular shows like Modern Family, How I Met Your Mother, and Sons of Anarchy to boost its own service.

Digital I predicted that: “The loss of the titles—which also include Prison Break and New Girl, with Homeland expected to follow soon—could cost Netflix UK as much as £90m annually if all of the 750,000 subscribers were to follow their favorite shows and leave.”

It added: “Our previous research showed that over half of Netflix’s top viewing was to major Hollywood studio content.”

The Ampere Analysis stressed that despite the tight race between Netflix and its rivals, Netflix remains the most popular streaming service in the UK, with 14 million subscribers at the end of last year, then Amazon with 12.3 million and Disney+ at 4.7 million.

 

'We are Staying Calm'

Netflix’s co-chief executive Reed Hastings confirmed his worries about the slower growth in subscriptions during a conference call saying: “We are staying calm and trying to figure it out.”

Yet Mr. Hastings disagreed with the idea that competition could be the reason behind the slowdown. He said: “There’s more competition than there’s ever been,” he added, “but, you know, we’ve had Hulu and Amazon for 14 years, so it doesn’t feel like any qualitative change there.”

He emphasized: “It could well be Covid effects. It could be we are pushing on a smaller market than we thought. But I’m not sure why.”

From another side, Ted Sarandos, Netflix’s other co-chief executive, looked more optimistic. He proudly explained that the company succeeded in its investment in international programming.

Referring to Squid Game, Call My Agent, and La Casa de Papel, he added, “And we were betting that you could take films and series from anywhere in the world and entertain the entire world.”

From its part, Netflix pointed out that one of the reasons for its slowdown first-quarter forecast is that many of the company’s new releases were scheduled for the end of the first quarter in March.

 

Controversial Content

It is not surprising that Netflix has been facing backlash from viewers in several countries because of its broadcasted content. Many observers describe the Network’s streaming content as promoting homosexuality, violence, and immorality.

The Egyptian media writer and researcher Khaled al-Aswar told Al-Estiklal that this network seeks to promote immoral values that do not fit with conservative societies through its artistic production.

For instance, Netflix broadcasts the film Cuties. The film raised severe criticism and allegations about sexualizing young girls and being potentially able to lead to child exploitation. Cuties tells the story of an 11-year-old girl who stands against her conservative family's traditions and decides to join a group of dancers named "The Cuties" at her school.

However, Cuties was not the first criticism-generating Netflix production. Netflix deliberately and repeatedly airs controversial films and series.

The second example of controversial films shown by Netflix is the four-season American teen series 13 Reasons Why. The series tells the story of a 17-year-old high-school student who committed suicide. Before killing herself, she left 13 tapes for 13 different people who could play a part in her decision to take her own life. Various organizations and groups including the Parents Television Council in the US condemned the film for glorifying suicide and self-harm.