Friday 12 August 2022 06:04 PM Experts reveal why rivals are finally challenging Netflix's dominance trends now
It has lost over a million subscribers, seen a slump in shares and now lost its title as the world's biggest streaming giant.
So it is little surprise that some are questioning whether this the beginning of the end for Netflix.
In the same way the online video trailblazer once put the final nail in the coffin of Blockbuster, experts have warned that it too may follow suit unless it is able to reverse its post-pandemic fortunes.
Yesterday, Disney edged past Netflix with a total of 221 million streaming subscribers at the end of the most recent quarter — figures that included its general audience television platform Hulu and the sports-focused ESPN+.
That contrasts with 220.7 million for rival Netflix, which has been haemorrhaging customers since the start of the year.
Paolo Pescatore, a tech and media analyst at PP Foresight, told MailOnline Netflix 'needs to diversify its business' if it is to survive.
It has lost over a million subscribers, seen a slump in shares and now lost its title as the world's biggest streaming giant. So many analysts are asking, is this the beginning of the end for Netflix? (stock image)
In Britain, in the last quarter Netflix's share of the streaming market nose-dived from 9.4 per cent to 4.5 per cent (pictured)
'Netflix should pivot itself towards a one stop shop for users,' he said.
'It needs to diversify its business and move into new areas as it is doing so with games. Increasing revenue and driving engagement must be a priority.
'There are plentiful opportunities to offer other features, services and billing options.
'Netflix's growing subscriber base of more than 200 million will be an attractive shop window for games developers.
'Despite this, competition in games is even greater and will take Netflix many years before it can established itself in this cut-throat market.'
That appears to have been borne out in recent figures, which show the ambitious expansion into gaming has got off to a sluggish start.
According to app tracker Apptopia, Netflix's games have only 1.7 million daily users — less than one per cent of its 220.7 million global subscribers.
There are now a total of 26 official Netflix games available exclusively to subscribers of the streaming platform, including two 'Stranger Things' spinoffs.
Mr Pescatore said that Disney overtaking Netflix was a 'pivotal moment in the streaming wars', saying the former had more room to grow than its arch-rival.
'In essence both companies are at different phases of growth,' he said.
'Disney is still in start up stealth mode when it comes to direct to consumer services.
'Netflix remains the market leader and benchmark for all streamers when compared directly to Disney+ and other rivals to its crown.
'It will take Disney+ a few years before it is on par with Netflix on subscribers and will experience slower growth during that period.
In March, Netflix also increased its prices for the second time in just over a year. Many customers were not very impressed
'However, Disney as a company is more diversified and is heavily reliant on bigger blockbuster content.'
He added: 'Disney is still rolling out into new markets. This represents the next wave of development and key to its future growth plans.
'Netflix is already widely available and heavily focussed on refining the product and moving into new areas in order to diversify its revenue stream.'
At the start of the year Netflix sent a scare through the streaming industry when it posted its first drop in subscribers in a decade, and has so far lost more than one million customers since the beginning of 2022.
Much of this decline reflects increased competition from the likes of Disney but there are also fears that streamers are tightening their belts amid the growing cost of living crisis.
In March, Netflix also increased its prices for the second time in just over a year.
The basic and standard plan went up by £1 a month to £6.99 and £10.99 respectively, while the premium tier went from £13.99 to £15.99.
Customers took to Twitter to complain about the price rise, with one writing: 'I'm saving for a house so I won't be renewing my subscription.'
Another added: 'It'll be Netflix or chill for many households. The cost of living is getting out of hand.'
Netflix's ambitious expansion into gaming has got off to a sluggish start, figures show. 'Stranger Things 3: The Game' is one of two retro-style 'Stranger Things'-themed spinoffs
In July, Netflix announced had lost 970,000 subscribers in the second quarter of this year.
This is almost five times the amount lost in the first three months of the year (200,000).
It's also a massive drop from the 8.3 million new subscribers added in Q4 2021.
Here's how many subscribers Netflix has gained or lost in the past five quarters:
Q2 2022: Lost 970,000
Q1 2022: Lost 200,000
Q4 2021: Gained 8.3 million
Q3 2021: Gained 4.4 million
Q2 2021: Gained 1.5 million
As newer players like HBO Max, Paramount+, Apple TV+, and others enter the fray, viewers are also having to make choices about which services are the most essential.
'At the centre of it is Netflix, this large company with the biggest streaming service, that is now facing a wave of competition that, while they were prepared for it, is hitting them all at once and eating into their market share,' Julia Alexander, senior strategy analyst at Parrot Analytics, said.
In Britain, Netflix's share of the streaming market nose-dived from 9.4 per cent to 4.5 per cent in the latest quarter.
By comparison, Disney+, NOW TV, AppleTV+, and Discovery+ all experienced growth from April to June 2022, according to Kantar Worldpanel, the publisher of the Entertainment on Demand report.
Market leader Amazon Prime saw a small dip in share, from 27.1 per cent to 25.9 per cent.
However, any talk of this being the beginning of the end for Netflix is strongly rebuffed by US streaming & online video expert Dan Rayburn.
'There is no basis to use the word "dying" or "demise" when it comes to Netflix. It's factually not accurate,' he told MailOnline.
'While all of Disney's direct-to-consumer services combined have more subs than Netflix, it's not an apples-to-apples comparison.
'Disney's direct-to-consumer business lost $1.1 billion in a 90-day span. That's a loss of $1.1 million every day.
'In the same time period, Netflix had positive cash flow of $12.7 million.'
He added: 'I think it is very important to separate "facts" from opinions and the fact is, Netflix is financially stable and is not dying.'
Nevertheless, there have been calls from many experts for Netflix to revise its all-at-once release strategy for television shows.
'With Netflix, or anyone, never say never,' said Peter Csathy, founder and chairman of advisory firm Creative Media told CNBC.
'Just like they said "no way, no advertising," don't assume that binge viewing is forever.'
He added: 'Binge viewing is on the table.'
In April 2022, Netflix co-CEO Reed Hastings revealed in an earnings call that the platform would introduce ads in the 'next year or two'.
The share price fell significantly following the news, wiping away roughly $70 billion in the company's market capitalisation.
Then in May, the streaming service sped up plans to introduce a lower-priced ad-supported subscription plan, saying in a note to employees that it was expected to be introduced by the end of the year.
Industry experts say that, while the new ad-supported subscription plan may help to entice some consumers who are battling a cost-of-living crisis, it could also drive others to rival services including Apple, Amazon and Disney+.
In April 2022, Netflix CEO Reed Hastings revealed in an earnings call that the platform would introduce ads in the 'next year or two'.
Netflix had at the time just revealed that it lost 200,000 subscribers in the first three months of the year, and expected to lose 2 million more in the second quarter.