By now everyone knows that the streaming giant has suffered a huge loss. The company has itself addressed its investors in a letter about the issue. It has pointed out market saturation and password sharing as the main reason behind the low numbers. Netflix isn’t the lone wolf in the streaming industry anymore. The big wigs have entered and are expanding pretty quickly, notably, HBO Max and Disney+. And when Netflix took a stance against Russia when it invaded Ukraine, it lost many subscribers. But now market analysts and experts have revealed another key factor that acted as a catalyst to this setback—Market inflation.
Post-covid market inflation is on the rise
We first felt the pinch of rising inflation during the peak pandemic. Now that the massive hysteria has subsided and people are slowly resuming their pre-covid normal lifestyle, the prices have remained the same. In fact, the prices have gone up. The “inflationary environment” has forced people to become cautious with their money. And Netflix and the rest of the streaming industry are facing the repercussions.
According to Steve Wreford, a portfolio manager at Lazard Asset Management, “What’s happening with the streaming services is the canary in the coal mine. Inflation puts pressure on the consumer, you think about which is your least valued purchase, and you then find out which businesses are really going to struggle in that inflationary environment.”
As people’s disposable incomes reduced, they opted out of subscriptions.
Yahya Mokhtarzada, co-founder of Truebill noticed that 2.5 million users canceled their subscription plans last year. At one point, the cancellation outnumbered new signups.
Will the password crackdown lead to fewer subscribers for Netflix?
The market analysts’ insights give us a reason to question Netflix’s new password-sharing rules. Monetizing households doesn’t seem like the right solution. The streamer introduced new password-sharing plans for Chile, Costa Rica, and Peru. The standard and premium customers can add two more accounts for an extra $2.99. This may drive away customers who don’t have the extra money to splurge on a subscription plan. The streamer may likely witness a further drop in numbers.
While we await the new password rules to be in effect, share your thoughts on the subscription rates in the light of an inflation.