Netflix has also been available in Germany since 2014, but the company was founded in 1997. It all started with a DVD.
Who goes to the video store these days? In many places it is not that easy to find one in the vicinity at all. Streaming is hot! As one of the world’s largest providers, Netflix has played its part. According to the company, the streaming service currently has around 221 million paying members – and is therefore considered one of the top dogs in the industry alongside competitors such as Disney + and Amazon Prime Video.
An attempt and its consequences
When Reed Hastings (61) and Marc Randolph (64) founded Netflix in California in late August 1997, they could only hope that their company would one day become so well known. Long before streaming series and films became popular, the co-founders were already focusing on entertainment 25 years ago, but they chose a different path at the time.
In the beginning there was the idea of sending DVDs by post. They took a chance, shipped one of the disks and it arrived intact. When the site first launched in 1998, Netflix.com became the forerunner for online video stores. Customers initially had to pay individually for the DVDs they rented, but the company introduced a subscription option in 1999. More and more film and series lovers discovered the offer for themselves. According to Netflix, the service finally reached the five million member mark in 2006.
Noisy a report by the tech magazine “Wired” as of 2020, there were still more than two million people in the United States using Netflix in this way. Depending on the subscription chosen, consumers can in the US even today borrow up to three DVDs or Blu-rays at the same time and have them sent to you. The costs for a subscription are comparable to those of the streaming service and are around ten to almost 20 US dollars a month.
The leap to streaming
Finally, in early 2007, Netflix introduced the option to stream content directly. The plans for this step had existed for several years at this point. According to Variety, Ted Sarandos (58) first met his current co-boss Hastings in 1999 to possibly join Netflix. The co-founder had therefore already spoken to Sarandos at the time that he saw the future of Netflix in streaming. “We never wasted a minute trying to save the DVD business,” Sarandos told the industry magazine in 2018.
Little by little, Netflix conquered the global markets. In 2010 the service came to Canada, in 2011 it started in the Caribbean and Latin America and in 2012 the UK followed, among other places. Streaming fans in this country still had to be patient, because the service only started in Germany, Austria and Switzerland in 2014. Netflix was able to establish itself in numerous other countries and win more and more users. In 2021 it was more than 200 million for the first time.
Netflix customers are running away?
But Netflix has two problems: thousands of users are leaving the platform and many millions watch series and films but do not pay for them. As the group has announced, the streaming service lost around 200,000 subscribers in the first quarter of 2022, and in the second quarter it was even around 970,000.
It was actually a less devastating development than had been expected. Netflix had expected up to two million users to quit. If you want to pick a single reason for the somewhat more positive numbers, according to Hastings it is probably the release of the latest season of one of the service’s most popular series: “Stranger Things”.
The reasons for the loss of so many users are likely to be manifold. Due to the current economic situation, some will certainly consider whether they would like to continue financing a subscription. In addition, the market is flooded with numerous competitors who all want a piece of the pie.
If you have subscriptions with different providers, you quickly add up to a (too) high amount that has to be paid every month. “Users look at the total costs of their streaming subscriptions,” explained Lisa Jäger from the management consultancy Simon-Kucher & Partners in a press release at the beginning of August. Based on a representative survey, the ideal price range is between 17 and 30 euros. In many cases, more than two streaming services are not possible with this budget. A Netflix “standard” subscription for 12.99 euros and a Disney + monthly subscription for 8.99 euros together are around 22 euros.
“Ten euros [für einen Dienst] users perceive it as good value for money. 15 euros are considered expensive, but acceptable,” said Jäger. With every subscription, the “subjective value for the user” is decisive. “If the content is particularly attractive, users are willing to pay more. Quality can cost something.” At the same time, the quality of the content must be right in order to keep customers. If a consumer decides on a service, this is often “a decision against another”.
With the large number of Netflix productions, some might get the impression that quantity has been the focus here in recent years – even if the service has hits like “Squid Game”, “Bridgerton” or “Stranger Things” to offer Has. However, a new series adaptation of “Resident Evil”, an extremely popular video game series, was recently able to convince only a few fans and critics. The first season was released in mid-July. A few days ago reported the industry magazine “Deadline”.that there will be no second season.
Everyone should pay
In South America, Netflix is currently testing two models to monetize the sharing of login data. According to the terms of use, this is actually prohibited, but according to the service, more than 100 million households are said to stream in this way without paying. The provider is working on ways to prevent sharing and then unlock it for an extra charge.
With one model, customers can add “extra members”, with the other they have a “home” and book more as needed. With the home version, users can also register once a year for up to two weeks on a TV set outside of the “home” free of charge, but only if they have not yet used the account at that location. To verify this, Netflix uses a mix of individual device IDs, account activity, and IP addresses to match a user’s location. The consumer then has to settle for streaming Netflix content on-site on their smartphone, tablet or laptop if they don’t want to pay the additional fee. If the tests are successful, the service will probably soon offer corresponding options worldwide. It remains to be seen how customers will react to this.
The streaming giant is also working on an advertising-supported subscription option. According to a report by “Bloomberg” Netflix is reportedly aiming for a monthly price of seven to nine US dollars. In comparison: The “Standard” subscription currently costs $15.49 per month in the USA. According to this, around four minutes of advertising are planned per hour – before and during certain content, but not afterwards. The option is to be introduced in at least six markets later this year. In other countries, the whole thing is expected for the coming year.