What has happened?

 

2022 is off to a rough start for streaming video on demand (SVOD) giant Netflix, which has seen large declines in share price since the beginning of the year. The company initially reported concerns earlier in the year, sharing a loss of subscribers who were unhappy with the ever increasing subscription price. Netflix had initially boosted the price of subscription to bolster revenue, however, this Tuesday the company reported a Q1 loss of over 200,000 subscribers. The release of the Q1 report sent the stock down another 25% during after hours trading.

 

What will change?

 

Netflix is seemingly beginning to lose traction, with many other streaming services now gaining on the giant in market share and service offerings. Netflix’s stock has dropped over 40 percent year to date, with investors now warning this significant loss may now mark the beginning of a major shift in the market.

 

What does this mean for the market?

 

There are several contributing factors to the apparent stagnation of Netflix’s growth. Since the height of COVID-19 sent many into lockdown, users began to branch out and adopt other streaming services, in addition to the traditionally key player. There is now a buffet of streaming platforms available for users here in Australia and across the globe. From Stan, to Hayu, Amazon Prime, Binge, Hulu, Disney+, HBO… The list goes on.

 

Streaming services are also facing another form of competition… Themselves. By offering such an easily accessible and shared platform, these services have begun cannibalising themselves. Password and account sharing is now widespread, and fundamentally unravelling the monetisation of the subscription model.

 

What is next?

 

While Netflix have published their concerns with password sharing with plans to crack down on offenders, they have now come forward with the prospect of offering tiered subscription plans. Netflix has historically taken the stance that their service will remain simple, and premium. However, the business is now considering offering lower priced subscriptions with the inclusion of paid advertisements. Netflix is not the only player in the game wishing to expand their offering, with Disney+ announcing similar plans back in March.

 

So… the SVOD market is becoming more competitive by the day. What does this mean for us as advertisers? This is great news for the ad industry in more ways than one. SVOD services expanding their offering to include paid ad space means more inventory, on more platforms, with increased audience and contextual capabilities. Big win for advertisers!

 

Looking to leverage subscription on demand inventory across your next campaign? Reach out to your ADMATICian to discuss what may work for your brand.