OTT Company In Crisis

Binge-watching has been a favourite hobby of almost every person in this world. The lockdown periods attracted people to this practice of watching multiple episodes of a web series or television programme in rapid succession. With sporting events and theatres shut down, people were forced to stay indoors and adapt to over-the-top (OTT) services as their entertainment source. Foreseeably, the providers witnessed significant growth. This growth has been stable, if not increasing for all the streaming platforms in the post lockdown period, except for one. This streaming platform is well known for its content and is one of the oldest OTT platforms in the world. Yes, you guessed it right. It is none other than Netflix. 

Netflix Inc., an American subscription streaming service and production company was launched on 29th August 1997. It offers thousands of films and television series to its subscribers. The company headquartered in California, United States is known for its prominent series like Money heist, Thirteen reasons why, teen wolf, The office and many more. In revenue and statistical terms, the company has been doing wonders. Its revenue has significantly increased from $3.1 billion in 2011 to $24.9 billion in 2020. The subscribers have also increased tremendously from 21.5 million to 192.9 million. Everything was going well for the company until 2022 came. 

For the first time in more than a decade, Netflix witnessed a decline in stock prices and subscribers. It lost 40% of its market value due to a dip in its subscriber base. The company has lost about two-thirds of its value in 2022 so far. The market cap has dropped below $100 billion and it has become the 146th largest company in the world. Between Q1 2020 and Q1 2022, the market share has declined from 55.7% to 45.2% globally. It has lost 2 lakh subscribers merely in the first 3 months of the year. To escalate the situation, Netflix is expected to lose another 2 million subscribers in the next quarter. There is not a single cause for this decline. 

Different reasons together added to the drop in the subscribers and stock price. Primarily, Netflix suspended its service in Russia. It is their way to protest against Russia’s full-scale invasion of Ukraine. Netflix also refused to carry 20 Russian free-to-air propaganda channels that it was required to host under Russian law. The company is even taking additional steps to completely shut down the services. Due to this, the company lost a major chunk of 7 lakh subscribers. Another major reason is the soaring inflation.  During lockdown periods, binge-watching became an integral part of almost everyone’s life. However, the post lockdown period experienced an upsurge in the price of essential items. Due to these high costs, customers are forced to rethink their budget and cut down on permissive expenses, which impacts the streaming service. 

Adding to all these issues is the matter of stabilising the demand. As Netflix allows people to share passwords

without paying, the subscribers cancel their subscription and binge watch on the acquaintance’s account. This affects the revenue prospects of the company. Netflix has also gone down since it is the most expensive streaming platform among all others. Recently, the company raised subscription prices in the US and Canada which increased the cancellation traffic by 0.5% In the 1st quarter. It stopped the free trials across the world which also disappointed the subscribers. 

Another emerging problem for Netflix is the rigorous competition in the OTT industry. Several rivals like Disney, Warner Bros Discovery, Hotstar and many more with deep content libraries have entered the market. According to the IBIS World, Netflix controlled 31.5% of worldwide online streaming in 2016. However, by 2020, its share has eroded significantly to 27.6%. On the contrary, YouTube’s share has increased from 20.6% to 21.8%, Disney’+ share from 12.2% to 18.6% and Amazon’s prime share from 5.3% in 2016 to 8.2% in 2020. This all represents that naturally, other streaming platforms are getting the advantage of Netflix’s customers. 

However, other streaming platforms like Hotstar and HBO Max also don’t have any restrictions on sharing accounts and passwords. Therefore, it’s only a matter of time before these companies will be facing the same problem. There are chances that Netflix might be the first one to face this as it has been in the field way before

all other companies. 

To conclude, Netflix has been revising its strategy recently to plunge back and regain the lost subscribers. It is expected to launch a test programme in which customers must pay for sharing accounts. The company is also considering launching a lower price, advertisement-supported subscription option. Its recent entry into the gaming industry also depicts the desire to attract and fulfil the demands of all age brackets. The company is working hard to revive back and all the stakeholders of the company wish that it just might be a hiccup and pass soon. 


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Netflix Suspends Service in Russia Amid Invasion of Ukraine – Variety. (2022). Retrieved 10 May 2022, from

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