We just found noticed a tweet on Twitter showing stats for amount of new subscribers coming to Netflix globally. While 2016 started with a growth of 6.7 million subscribers worldwide, it slowed down in the second quarter to only 1.7 million new subscribers. What has happened? What might be causing this slowdown?
Before you read on, take a look at the tweet and see the stats the same way we did.
After strong growth figures year after year, Netflix ran into problems in Q2 this year. They say it’s because of the price hike.
Nope. VPN. pic.twitter.com/AHBD87wRuH
— Avtar Ram Singh (@AvtarRamSingh) 3. oktober 2016
What is causing the Netflix subscriber slowdown?
After looking at the stats for a few minutes and thinking about what we actually see, there are lots of thoughts and reasons coming to our mind. So, let us share what we think, and then you can feel free to agree or disagree with us later.
What caused the big jump in the first quarter of 2016?
Maybe you noticed a big growth in the start of 2016. Before we get to the second quarter slowdown, the first quarter should be analyzed as well. There is however not hard to find out why there was such a big growth in the first quarter of 2016. It was on January 6th that Netflix was made available in more than 100 new nations at the same time. With Netflix made available in so many nations a boom in new subscribers simply had to come at once. It must rather be said to be surprising that the boom wasn’t bigger!
What caused the slowdown in the second quarter of 2016?
There are lots of reasons for the slowdown in the second quarter of 2016. Here we will give some reasons.
- The second quarter is always the weakest for Netflix:
If you look on the stats image you will always notice that the second quarter is the poorest quarter every year. In 2015 it gave 3.3 million new subscribers, while it back in 2014 only gave 1.7 million new subscribers. Considering the fact that it now is a worldwide service however should have given stronger numbers in 2016 no matter what! - The competition is getting much stronger:
Netflix is the leading streaming service, but the competition is getting bigger. Amazon Prime is booming as never before in the USA, UK and in Germany, while other streaming services such as CBS All Access, NOW TV and HBO Now also grows. These have the advantage of live streams, immediate access to new content and much more, and their prices are very competitive with the Netflix prices. - Netflix has made it almost impossible to use VPN’s to change your Netflix region.
January started nicely with the Netflix expansion. But, then came the Netflix battle against VPN and SmartDNS services which is still being fought. For lots of users outside the USA this was a big loss. Since the amount of movies and TV series available in different Netflix regions vary a lot, many users decided to get rid of their Netflix subscriptions once region switching was made almost impossible. This has probably led to subscribers cancelling their subscriptions, and also stopped new users from registering. - The content people want is not on Netflix:
This is quite similar to what we wrote about competition. Netflix is doing a great job on producing original material, but for those without a Netflix subscription those are not really interesting. People want to watch the TV series they know from before. Those TV series might be made available on Netflix a year or more after they originally aired, but why wait so long to watch Grey’s Anatomy on Netflix, when you can watch it immediately on Hulu instead? - A price increase for the services of Netflix:
The article with the illustration was first published in Wall Street Journal. They point out that the price increase for a Netflix membership for sure impact the decline in growth. At the same time they emphasize that the overall revenue is getting bigger, due to the higher Netflix subscription fees.
These are just some thoughts from us in the IP Address Guide on the Netflix subscriber slowdown. What do you think is causing the slowdown? Will it continue like this, or do you think there will be a boost in new subscribers in the third quarter of 2016 again for Netflix?
