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Subscribing to a streaming service is great but it seems like every major network has launched their own streaming services. With the vast options in the market, there are greater selections to watch than ever. However deciding which subscription is worth the time and money can be tough. Netflix seems to be the leading choice these days but sometimes Netflix does not carry a certain show which the subscriber want to watch. With the numerous subscriptions to choose from, it is indeed overwhelming which one you should go for. For these reasons, the streaming service providers are also struggling to keep up with the competition.
Growing Competition Affecting The Company’s Growth
Netflix earlier of last month has quietly admitted that they are in fact affected by the growing competition in their line of business. Netflix rarely acknowledges concern when it comes to their competition, however, when they released their Q4 2021 earnings in January 2022, they finally admitted that the competition had an impact in their earnings. With the competition growing, it is indeed eating up some revenue for Netflix as their shares fell about 18% just hours after the forecasting of just about 2.5 million new net global subscribers for their first quarter.
The competition is starting to affect Netflix stating that the added competition may be a factor which affected their marginal growth. Subtly acknowledging this means that other streamers such as +, WarnerMedia’s HBO Max, ViacomCBS’s Paramount+, NBCUniversal’s Peacock and Disney+ are making a dent on their revenue and these other streamers are successfully gaining some of Netflix’s market share. Their announcement of raising their prices in U.S. and Canada does not help their case either as this potentially exacerbates competitive pressure. The competitive pressure is vital especially in the U.S. and Canada where Netflix will be increasing their rates from $13.99 per month to $15.49 for a standard plan.
Users Losing Interest With The Service Within Six Months
One main problem of the streaming service providers is when get a surge of subscribers once they launch or release a highly anticipated show or film but once these subscribers finished watching the show, they unsubscribe just after a few months. The retention of subscribers is hard because of the increasing number of streaming services in the market. A lot o streaming providers admit that this is in fact a challenge even for those who have deep pockets.
According to some analyst, one solution to this problem is the streamers need to constantly provide new content for the users. This will keep the subscribers happy as they have vast libraries of old shows and movies as well as new shows to keep them entertained. It is easy for the consumers to unsubscribe when there are plenty of options to choose from. Research show that majority of the subscribers do not stick around for long. It was estimated that roughly half of the U.S. viewers who have signed up within three days of the release of shows such as Wonder Woman 1984, Greyhound and Hamilton have switched services in a span of six months.
Increasing Budget For Marketing And Content
As a result of the increasing number of competitors as well as the increasing number of customers who leave their services, the streaming service providers need to constantly spend money on their marketing as well as spend money on retaining customers by releasing new contents. It was reported that the streaming services have spent about twice as much on their content both for acquiring original past shows as well as creating new shows in the last few years. This is according to the data released by the research firm Ampere Analysis. Even Netflix has spent about $17 billion on their content last year just to keep their subscribers happy.
In the end, the big companies may be struggling but the ultimate winner in this scenario is the subscribers. With the increase competition, the users are able to choose whichever service they want to which give them a lot of freedom to choose the service they want. As a result of these problems as well, the providers are constantly improving their services and content to make the subscribers happy which in turn make the subscription worth their money.
Sources: CNBC, Business Insider, Cnet, The Wall Street Journal