4 Strategies Netflix Can Implement to Increase Revenue Despite Slowing Subscriber Growth

After more than a decade of limited competition, netflix (NFLX -4.59%) faces strong resistance from new rivals entering the streaming industry. Several deep-pocketed studios launched their own streaming services during the pandemic — at what they thought was excellent timing. The move came after years of Netflix eating away at their profits, catching people canceling cable subscriptions and switching to streaming video instead.

As a result, Netflix’s subscriber and revenue growth is slowing, leading the streaming pioneer to consider options to rekindle the momentum it lost. Shareholders need not despair, as the company has several options. Let’s look at a few.

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1. Cheaper ad-supported version

Netflix has so far resisted suggestions that it should launch an ad-supported, lower-priced version of its service. However, after evidence from competitors reveals the strategy is working, Netflix may want to reconsider. Indeed, CEO Reed Hastings, during the company’s last conference call on April 19, said:

“And those who have followed Netflix know that I have been against the complexity of advertising and a big fan of subscription simplicity. But as much as I’m a fan of that, I’m a bigger fan of consumer choice. And allowing consumers who would like to have a lower price and who are ad-tolerant to get what they want makes perfect sense, so that’s something we’re looking at right now. a year or two. But consider us quite willing to offer even lower prices with advertising as the consumer’s choice.”

2. Limited Account Access

Netflix has undoubtedly known about account sharing for quite some time. Until recently, she had largely ignored the phenomenon. Now that subscriber growth has stalled, now is the time to tackle this problem. In its latest earnings release on April 19, management noted that approximately 100 million households share a Netflix subscription. Already, Netflix is ​​working to generate additional revenue from people who watch content but don’t pay for it.

3. Start sets every week instead of all at once

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Those who have had a Netflix subscription over the years have probably noticed a big difference in the way it releases new series compared to traditional media companies. Netflix is ​​releasing series at the same time in an attempt to encourage binge-watching, where people consume all the new content in one sitting. While this may encourage engagement around popular titles, it could hurt subscriber retention.

People who are Netflix members for two or three hit shows can watch the series the same day it comes out, pause or cancel their subscription until their next favorite show comes out, then restart. This way, they can only pay for a few months of service per year. If Netflix were to stagger the release of the series by one episode per week, it could incentivize those customers to pay more for months of service for a year.

4. Get blockbusters on the big screen first

Another unique aspect of Netflix that it might consider changing is that it releases all of its new movies directly to the streaming service, skipping the box office altogether. The strategy may work against the streaming pioneer as the big screen creates a lot of buzz around blockbuster movies. More importantly, competitors generate billions in box office revenue, which helps support larger content budgets. For example, the latest Batman movie grossed $760 million at the box office and is now available on HBO Max.

One last word

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Netflix lost subscribers for the first time in nearly a decade. Additionally, it forecasts a loss of two million subs in the second quarter of 2022. The strategy of operating with limited competition has worked well, but with competitors entering the fray, it may be time to change. The stock is down 71% from its peak, so it probably needs to demonstrate an effective adjustment sooner rather than later.

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