“You can have mine”—be it a pencil during a kindergarten exam or one earpiece of a pair of earphones, or even a Netflix password, the tendency to share is innately human. A business model that views sharing as a threat is simply swimming against the current.
Netflix’s loss of 200,000 subscribers in less than 100 days to March 2022 has been surprising and yet, in hindsight, quite inevitable. For over 20 years, this much-vaunted disruptor of the movie industry has played the same game. The decline in subscriber numbers is just another indicator that it is time Netflix recalibrates its business model which is no longer the recipe for success that it once was. Indeed, the growing young population in the so-called emerging markets might well have been prolonging the death of a cracking business model that has ceased to be about customer value.
And now, the fault lines are beginning to show (see Figure 1). An additional 200 million subscribers are expected to leave Netflix in the next three months to July.
Figure 1: Netflix’s cumulative quarterly paid subscriber additions worldwide, 2016-2021
Source: https://www.statista.com/chart/21465/global-paid-net-subscriber-additions-by-netflix/
The decline in subscriber numbers is just one of the slew of problems Netflix has been facing in recent times, including unhappy customers blaming content and pricing. The stock market has begun to factor this in. Netflix's share price fell by over $122 on April 20—a decrease of over 35 percent in one day and a fall of $35 billion in market capitalisation. The fall in share price, accompanied by billionaire investor William Ackman’s share sale of $1.1 billion at a loss of $400 million, is just a lagging indicator of the problem on hand.