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The Company Who Never Showcased Ads Is Now Changing?

Updated: Jun 28, 2022

Netflix, founded in 1997 is one of the world’s largest streaming platforms. With 150 million subscribers from all around the world, its net worth is estimated to be around 125 billion dollars. Especially with the pandemic, Netflix hit the peak of its gains in 2020 and 2021. But recently, it announced that it lost 200.000 subscribers in the last few months. What has caused the downfall of this big company?

When the epidemic started in 2020, people were stuck at home with very few entertainment sources. It was a great opportunity for Netflix to advertise and gain subscribers. Many people did start using the platform and the company's gains increased significantly through the years 2020 and 2021. But with the restrictions slowly dissipating, people are starting to go out more and are starting to find new entertainment sources. The company announced it has now given up all its pandemic gains. The reason, apart from the restrictions disappearing, is that Netflix started facing a lot of competition from other streaming companies such as HBOmax, Disney plus, Apple TV, and Hulu. This increased competition resulted in losing customers since these companies offered content that was not available on Netflix. Before, Hollywood let Netflix have a lot of its old movies and series since there were not many people who were willing to pay to stream them. But recently, a lot of people started streaming them on Netflix so the companies who offered these old movies took them back to put them in their own services. The series ‘Friends’ for example, which was very popular among people, is not on Netflix in many countries and is available on HBO max. While a lot of praised content is disappearing, the company is losing a lot of subscribers and its stock is facing a major downfall, now down 25 percent. The pressure of competition and the loss of customers resulted in the increase in prices in North America this year. Netflix raised its monthly cost for its basic plan from 8.99$ to 9.99$, the standard plan from 13.99$ to 15.49$, and the premium plan from 17.99$ to 19.99$. Along with the price raises, The Co-CEO of the company Reed Hastings announced that Netflix was going to add a plan with advertisements for a more affordable price. For years, the company insisted on not showcasing ads in any of its plans because it was one of its selling points. However, this recent downfall has caused them to take extreme measures. One of the other reasons that prevented Netflix from gaining profit was password sharing. It announced that more than 100 million households are using a shared password and that because of their recent situation, they have to take action. They did not prevent it from happening, but they found the people and let them continue sharing passwords for the cost of two dollars.

Netflix, one of the most well-known and commonly used streaming companies, is facing big challenges that lead it to take serious measures. The future of the company depends on these new projects and with all the competition it is facing, it is difficult to predict what will happen next.

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