Netflix is not an online video Titan that was in the past and is likely to lose the so-called streaming war in the current way.
This is according to a report by Needham & Co. analysts released on Monday, which casts doubt on the company's chances of beating competitors such as Disney, Apple, Peacock and Paramount. Analyst note, based on a survey of 504 US-based Netflix members, revealed major challenges.
In January, Netflix stocks fell nearly 20% after reports of weak guidance. The company said it expects to add 2.5 million new customers in the first quarter, well below analysts' estimates of 5.9 million. It also said that only 8.3 million members were added in the last quarter, as against the original estimate of 8.5 million.
Reed Hastings, co-CEO of Netflix, admitted during a monetary call with analysts that "there is more competition than ever before." However, he said the streaming video market is "too big" and the company's implementation is stable and improving.
Netflix did not immediately return calls for comment.
Here are the issues Netflix needs to overcome, according to Needham analysts.
Netflix members are increasingly dissatisfied
Netflix members are not so keen on the service. Thirty-one percent of respondents said they were "less satisfied with Netflix content than a year ago," according to the survey. What Needham analysts say is a sign that many people may unsubscribe from their Netflix subscriptions this year.
The authors say consumers may be more willing to subscribe to other video services because they have content previously not seen on Netflix during the Covid-19 epidemic. Other streaming services also offer lower subscription plans, which are cheaper than Netflix and may be more attractive to the company's dissatisfied customers.
Netflix's pricing policy is flawed
Netflix's price model presents a "competitive disadvantage" as each of its subscription tiers includes the same library of shows, the report said. Instead, company levels are based on the number of devices users use to access services and other technical capabilities.
However, many competing streaming services have free and low subscription plans that give viewers limited access to certain content or require customers to watch ads for less money. This pricing strategy has been successful for competitors, the authors claim, citing Discovery +, which "earns more ad-lite tier per month than ad-free tier."
Rising prices prevent consumers
According to the report, due to Netflix's recent decision to raise monthly subscription prices, 41% of respondents to the survey said they are "more likely to be churned out in 2022". Netflix announced a 1 to $ 2 monthly increase in January.