What Next For Netflix?: Netflix attracts lowest number of new subscribers in 2021

January 17, 2022

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2 min read

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What's going on here?

Despite stay-at-home measures leading to many new subscribers and record-setting growth for Netflix in the UK in 2020, latest figures show that 2021 has been a different story.

What does this mean?

The streaming giant has attracted the lowest number of new subscribers in the UK in 2021 since its launch here back in 2012. Although most of the UK’s younger demographic are estimated to be subscribers to the service, only half of those aged 55 to 64 with internet connection use Netflix. This means that Netflix will now have to focus on attracting “silver streamers”. The pandemic has forced everyone to become more comfortable with technology which has worked to Netflix’s advantage. Statistics point to internet usage rising by 72% in the over-75s demographic during lockdown. However, this does not automatically mean that these older consumers will be willing to subscribe as research conveys that they seem to prefer traditional UK broadcast channels. In order to attract these demographics, Netflix’s marketing costs are likely to soar, as well as its production and licensing budget to retain its current subscribers. With these rising costs, it is likely that subscribers will face additional price increases after a £1 increase on the most popular package last March. In addition, the company has also been hit by numerous legal battles, ranging from libel lawsuits in relation to portrayals in dramatised documentaries to being sued by a South Korean internet provider after Squid Game caused a surge in network traffic.

What's the big picture effect?

This slow in growth will be worrying for Netflix, especially with fierce competition coming from both Amazon Prime and the relatively newly launched Disney+. Amazon Prime is growing at a faster rate, and is expected to add 500,000 more video users in 2022 than Netflix. As Amazon has so many different limbs to it, the company is capable of loss leading. This means that Amazon can offer its Prime Membership at an initial loss as it can recoup the money elsewhere in its business. The benefits that loss leading brings may explain Netflix’s recent diversification into gaming, with the launch of Netflix Games back in November 2021 (see our article on this here). With Netflix’s rising costs of production, it may make it difficult to compete with Amazon’s ability to offer low memberships. Disney had a spectacularly impressive entrance to the market in 2020, providing consumers with the chance to watch their favourite Disney films, as well as offering new movies which could not be shown at the box office during lockdown for an additional fee. However, similarly to Netflix, it is expected that Disney will saturate markets even sooner due to its narrow content range. Therefore, in spite of this lower growth for Netflix and increased competition, it is most definitely not all doom and gloom for the streaming giant. It has enjoyed success with its original shows, such as The Crown and Squid Game, and is likely to continue to do so with its enhanced production budget, coupled with the loosening of lockdown rules permitting more filming to happen.

Report written by Imogen Wilson

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