Netflix needs no introduction. But did you know its history dates back to 1997? At that time, it was a subscription-based DVD mailing service where customers paid an amount for renting DVDs. It was in 2007 that the company decided to launch its streaming service, and since then, they have amassed more than 223 million subscribers, and the numbers are constantly increasing.
Netflix is one of the leading online streaming media services providing customers access to their favorite TV series like big short on Netflix and movies on as many devices as they want.
Although the OTT platform streams content worldwide, a subscriber in the USA may need help accessing European or Indian-based content. This is due to copyright issues and other regulations.
Luckily, this problem is solved by using VPNs and learning how to change your Netflix region to access geo-blocked content.
Although Netflix is the largest video streaming service, the platform’s market share domination is severely threatened by fierce competitors like Hulu, Amazon, HBO Max, and Disney+.
Amazon boasts over 200 million subscribers, Disney+ boasts over 164 million subscribers, HBO Max has over 76 million subscribers, and Hulu boasts more than 47 million subscribers.
Since the other online streaming services are threatening Netflix’s market share, the platform has had to make some changes to adapt to these challenging times. You’ll read more on this below.
The business model of Netflix is based on subscriptions, and that’s the company’s primary source of revenue. As a result, the profit and loss of the company are determined by its growth in subscribers and monthly subscription fees.
Netflix differs from other ad-free streaming services like Apple TV+ and Disney+. For example, the business model of Disney+ has several methods to monetize content outside of the streaming service. That’s why moving to an ad-supported model is not urgent.
Netflix’s failure to adapt to the shift toward advertising may cause them to fall behind the competition. They may be unable to keep up with talent retention and content creation as there will be a lack of additional revenue that comes with the ad-supported business model. This is the model utilized by other competitors.
Since subscribers keep returning to streaming services because of great content, Netflix continues to be successful. This is because they keep introducing original content on the platform to please their more than 222 million subscribers worldwide. However, the only way for the company to hold onto its market share is to stay competitive in content quality and pricing.
- Ending password sharing
Starting in 2023, Netflix has decided to end password sharing in the US. The decision is based on the recent crackdowns on sharers. However, the company is hesitant to make this move on a broader scale because they don’t want to alienate its subscribers. However, this is a step in the right direction that will help them adapt in the face of strife competition from other competing online video streaming services.
According to the company’s reports, over 100 million Netflix viewers consume their service using passwords borrowed from family and friends. The USA is the testing ground for their decision, and they will ask people to pay for sharing accounts.
In a few Latin American countries, the company has already started testing additional fees for password sharing, and the charges are around $3 extra. In addition, the primary subscriber will have to provide a verification code to anyone wanting to use and access the account outside the household. Unfortunately, the verification code does not come for free, and the company prompts the user outside the household for the code.
With the changes going through, similar implementation will be seen in the US. The company is thinking of charging account sharers slightly below $6.99.
The company plans to use account activities, device IDs, and IP addresses to ensure people do not find their way around the password-sharing rules.
- Embracing advertising
Ads are coming to Netflix, and the company is testing a lower-priced, ad-supported subscription tier. In addition, the streaming company is speaking to several potential partners to ease the company’s entry into the ad world.
The company hopes to maintain retention and member growth by switching to an ad-supported model. HBO Max and Hulu are already bringing in a lot of revenue with their cheaper ad-based plans, and Disney+ has also announced they will soon follow suit.
Netflix was once the uncontested king of the online streaming market. However, the rise of competitors carving a sizable market share for themselves has made Netflix sit up and fight to keep its throne. By ending password sharing and bringing ad-supported plans to the platform, the company hopes to retain its old subscribers while adding more to the list.