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[Natalí Stibb]

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Netflix reported 84.11 million paid streaming subscribers across the United States and Canada in the second quarter of 2024. After a decline in the U.S. and Canadian subscriber base during the first nine months of 2022, this marked a growth of nearly nine million compared with the same quarter of the previous year.

The EMEA (Europe, the Middle East, and Africa) region is Netflix's top-performing market in terms of subscribers, surpassing North America in the third quarter of 2022 for the first time. The company reported losing an estimated one million users worldwide in the second quarter of 2022, with the number of Netflix users standing at approximately 221 million that quarter. But why have audiences canceled their subscriptions? One reason for the unprecedented drop in account holders is Netflix's monthly fee, which has been increasing rapidly over the past few years. On top of that, viewers have also voiced criticism over Netflix's cancellation of popular shows and its lack of big movie franchises.

Netflix's vast content library offers anything from reality TV to Hollywood blockbusters, with shows and movies delivered in many different languages. As of early 2023, European countries such as Slovakia, Bulgaria, and Iceland boasted the largest content catalogs on Netflix. In the U.S., where audiences could choose from approximately 6,400 titles, "NCIS" and "Suits" ranked among the most popular streaming series on Netflix in 2023. As of that year, fan favorites "Stranger Things" and "One Piece" were the most expensive Netflix original series, with production costs of 30 and 18 million U.S. dollars per episode, respectively.

In an earnings release on Wednesday, the streaming giant said it ended the last quarter with about 238 million subscribers, up 5.9 million since the company began restricting the sharing of accounts to a single household.

Netflix is battling to regain market share after losing nearly 1.2 million subscribers in the first six months of 2022, the first decline in a decade, after a viewership boom during the COVID-19 pandemic.

In November, Netflix announced the launch of a cheaper subscription service that includes advertisements as part of its effort to find new revenue sources amid intensifying competition among streaming services.

Netflix said in its earnings release that it would phase out its cheapest advertisement-free plan, in an apparent effort to encourage people to switch to pricier plans or plans that include advertisements.

The world's largest streamer lost 970,000 subscribers in the three months ending June 30, the company announced Tuesday in its second-quarter earnings report, ahead of its dire prediction in April of losing 2 million.

In an April earnings call, the streamer announced that it had lost 200,000 subscribers, marking its first decline since 2011. It then predicted a loss of 2 million subscribers in the three months ending June 30. The news and the prediction panicked Wall Street and reverberated through Hollywood, damaging the company's reputation and prompting layoffs. And changing priorities might alter what shows and movies get made, how long they last, and if subscribers can afford Netflix without the interruption of commercials.

Production of new TV shows and movies takes some time, so "any moves Netflix makes today won't be felt for another two years, or possibly more when it comes to the consumer," says Tom Nunan, a former network and studio president who now teaches at the University of California, Los Angeles.

The subscriber loss "seems to be due to increased competition from other streaming services, adverse global economic circumstances, and the fact that the company already has a very high level of subscribers," says Ferran G. Vilar, CEO of streaming video analytics company NPAW. Netflix has 220.6 million subscribers worldwide, dwarfing the 74 million total for HBO Max and 87.6 million for Disney+, which are available in fewer countries.

A lower-priced, ad-supported tier of Netflix subscriptions is on the way, due in early 2023, Netflix said Tuesday. The service didn't really explain what those ads would look like, and in what markets they'd appear first. "Like most of our new initiatives, our intention is to roll it out, listen and learn, and iterate quickly to improve the offering. So, our advertising business in a few years will likely look quite different than what it looks like on day one."

There are similar plans already available from HBO Max, Hulu and Peacock (which also offers a free ad-supported tier), and soon Disney+ will join their ranks. It's just a matter of how long it takes Netflix, which last week agreed to partner with Microsoft for help, to get it up and running.

The price has not yet been announced (the most basic current ad-free monthly subscription costs $9.99, but the standard tier is $16.49) and it's not clear how the ads will fit into the programming. Will they be jammed into the middle of episodes never designed with a natural break for them, like those for network series are? "The elegance (of TV commercials) comes when they think about how many ads to place, where to place them and at what pace," Nunan says.

"Netflix has taken an expensive and extremely high-risk approach to streaming which seems to be: Let's outspend everyone and be all things to all streaming consumers. The scale of such ambition is impressive, but it turns out it's unsustainable. They are learning to become more strategic," Nunan says.

There's a new mandate for "Bigger, better, fewer" movies at Netflix, the Hollywood Reporter says, suggesting the streamer will seek more tentpole, A-list fare like "Red Notice," and fewer "vanity projects" such as Martin Scorsese's "The Irishman." Netflix's latest high-profile film, "The Gray Man" (in theaters, streaming on Netflix on Friday) starring Ryan Gosling and Chris Evans, is an example of one of these bigger films, reportedly costing $200 million.

"Netflix at this point is caught between a clear push to become more populist and broad-ranging and the fact that what's drawing people to other streamers is their strong connection to franchises," says Myles McNutt, an associate professor of communications at Old Dominion University.

Already, production budgets for upcoming Netflix series are being squeezed, according to a studio executive, except for the biggest titles like "Stranger," which cost more than $25 million an episode for its newest season, the Wall Street Journal reported.

The business of "saving" shows canceled elsewhere, as Netflix did for NBC's "Manifest" and Fox's "Lucifer," among others, seems to have moved to the free streamers: Roku nabbed a follow-up film to NBC's canceled "Zoey's Extraordinary Playlist" in 2021, and Amazon's Freevee picked up Season 2 of Showtime's "American Rust," starring Jeff Daniels. Those streamers are jockeying for a place at the table, and name-brand series are helping them get there.

"Netflix picked up 'Manifest' because it has data that proves the show has enough avid audience members to make the renewal a good business investment," says Nunan. These renewals on new networks or streamers are "always because the new 'show parent' believes in the property and has data to back up their beliefs. It's always a business decision, never an emotional 'saving' decision."

"Longer-running shows tend to cultivate a loyal, more invested audience and build deeper relationships between the platform and its subscribers. But they can also be more expensive," says Vilar, referring to the increase in salaries for actors and creatives as a series ages. Series that aren't major tentpoles like "Bridgerton" or "Stranger Things" will last for multiple seasons only if they continue winning or retaining subscribers.

It's a tough time in the economy, and Hollywood isn't immune. Netflix might make big changes as the ripple effects continue to be felt. Streaming TV is starting to look more like basic cable, as bundles emerge (Disney+, Hulu and ESPN+), ads become more prevalent and shows are increasingly released weekly instead of all at once.

Thousands of subscribers are canceling Netflix, and there's several key reasons why the streaming giant is going through hard times. Netflix essentially invented its own industry with subscription streaming, offering customers an all they could watch buffet of movies and shows that they could access for one low monthly fee. For a long time, Netflix's main streaming plan was only $7.99 a month, making it an extremely economical form of entertainment. Sadly, that price is now much higher, but that's only the tip of the iceberg.

Earlier this week, Netflix announced that they had lost 200,000 subscribers in the first quarter of 2022, and expect to lose a whopping two million more in the second quarter. This comes after a long period of sustained growth for the company, which for many years sat almost unopposed as the 800-pound gorilla of streaming. It's no wonder that Netflix's stock price dropped sharply, as when investors aren't used to ever getting bad news, any kind of bad news seems worse.

While Netflix is currently threatening to take actions like cracking down on password sharing between friends and family, a practice they once encouraged, the reality is that the backlash to doing that will likely lead to less subscribers, not more. Netflix may want to blame password sharing, piracy, and other economic factors for its decline, but in actuality, much of the reason Netflix finds itself in a bad spot is due to getting overconfident, and letting that guide it to make questionable decisions.

Netflix was once thought of as the best value in entertainment, thanks to offering thousands of movies and TV shows to stream for only $7.99 per month. In 2022, those days of value for money are long gone. Since 2014, the price of a standard Netflix subscription has been increased six times, with the most recent hike bringing the price to $15.49, almost double the original $7.99. Netflix is now the most expensive streaming service, with HBO Max in second at $15 per month. While price increases are a reality of business, six in eight years is bordering on ridiculous, and it's gotten to the point where each new increase is steadily angering even the most loyal Netflix subscriber. Especially now, in a time of economic uncertainty, the last thing anyone wanted to see was the price of their Netflix subscription going up again. Netflix really stepped on its own foot in this regard.

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