Netflix’s recent drop in subscribers may be a symptom of a broader phenomenon such as subscription fatigue

Late Tuesday night Netflix announced a drop in subscriber numbers: 200,000 fewer subscribers than in the previous quarter and a projection for the next quarter of another two million subscribers lost.

Netflix has fallen 40% in the stock market since the hours before the announcement, perhaps too severe a punishment considering that its subscriber base exceeds 220 million, but perhaps also a symptom of a drop in investor confidence in a subscription-based model.

Netflix has been the most paradigmatic case, but not the only one. Other companies such as Spotify or Roku, both with a business model based exclusively on streaming content in exchange for a monthly subscription, have also lost between 50% and 70% of their stock market value from one year to the next.

There is more discouraging news. CNN+, the brand new subscription service recently launched by Warner Bros. Discovery, is closing its doors despite more than $300 million invested in its launch and 150,000 subscribers in its few weeks of life. The previous projection estimated two million by the end of the first year.

The resulting position for Netflix is weak because, unlike HBO, Amazon, Apple or Disney, it has a streaming service that works alone without other activities that serve as a cushion. With prices higher than the others, it is becoming increasingly difficult to increase its fees without cutting into its user base. Even in a scenario of several years without increases -something that has not happened so far- it seems difficult for these users not to succumb sooner or later to one of the great attractions of OTTs: cancel in a few seconds and try alternatives.

The decade of the decade brought us into the era of subscriptions. As we approached the twenties, a certain subscription fatigue began to set in, possibly due to two main factors:

  • adding up a lot of low-dollar subscriptions that seem cheap, we suddenly realize that we are spending a lot of money on a monthly basis.
  • having accumulated so many services, it is easy to realize that some of them are hardly used and can be replaced by others that we are already paying for.

If Netflix starts to show signs of exhaustion, perhaps what awaits the others tomorrow is something similar: a rejection and a return to the demand for single-pay content.

All that remained was to add inflation to the equation: 35% of US households have cancelled some of their subscriptions to cope with the rising cost of living. Easy come, easy go.

Perhaps no apocalyptic tone should be used either for a model that has brought us flexibility and advantages, starting with a ridiculously low barrier to entry. Rather, it may be time for a simple correction, something that tends to consolidate the market or rescue business models that no longer seemed valid.


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