Netflix’s subscriber losses are a cautionary tale for media companies everywhere

By Rebecca Alter


Toronto, Ontario, Canada


There’s no doubt it’s been a challenging year for Netflix so far. In the first quarter of 2022 alone, the video-streaming giant lost 200,000 subscribers and expects to see another 2 million users drop its services by the end of the second quarter.

To make matters worse, Netflix’s shareholders are now suing the company over its drop in users and market value.

Resilient companies diversify their revenue streams.
Resilient companies diversify their revenue streams.

The streaming giant’s decision to hike prices and abandon subscribers in Russia because of the war in Ukraine have certainly both contributed to its subscriber losses. However, if we dig deeper into the way Netflix is operating, media companies everywhere can draw some valuable, business-saving takeaways from this situation.

An effective subscriber retention strategy can minimise losses

Aside from Netflix’s lost Russian subscribers, the streaming company is also facing large amounts of subscriber churn from its long-term users. According to The Verge, “[as] the number of cancellations overall has grown … new users are accounting for a smaller share of them — another indicator that Netflix is struggling to retain users for longer periods of time.”

This means the streaming giant needs to find a more successful way to identify at-risk subscribers and discourage them from unsubscribing.

But Netflix isn’t the only company struggling to slow the subscriber churn rate. After all, the American Press Institute reports more than half of publishers don’t know which subscribers are at-risk for churning.

Publishers with successful subscriber retention strategies are able to identify at-risk subscribers. Not only do they monitor subscriber activity for drops in engagement, but they’ll also re-engage subscribers that are losing interest in their content.

So, whether your company chooses to use push notifications or e-mails to re-capture subscriber attention, it’s essential that it monitors user behaviour and takes action to prevent mass churn.

You can further strengthen your retention strategy with a user onboarding process, where people become hooked on your Web site or app through a series of reminders, walk-throughs, and engaging events as soon as they become a subscriber.

Diversifying revenue streams can future-proof business

We all know subscription revenue can bring in large-scale earnings for media companies. Yet, the safest way to guarantee your company’s survival in the future is to explore more than one revenue source. This process, known as revenue diversification, means that if one of your company’s major revenue sources starts to run dry, it can still sustain itself from other income streams.

That’s why Netflix is finally starting to become more interested in taking on ad-supported revenue in addition to its subscription business model.

“Those who have followed Netflix know that I have been against the complexity of advertising and a big fan of the simplicity of subscription,” said Netflix’s co-CEO, Reed Hastings. “But as much as I am a fan of that, I am a bigger fan of consumer choice and allowing consumers who would like to have a lower price and are advertising-tolerant to get what they want makes a lot of sense.”

With subscription, advertising, e-commerce, and event-based revenue streams available to media companies, your organisation has unlimited opportunities to expand and maximise its earnings — all in a sustainable way.

Engaging users outside of content can improve user retention

Netflix’s most distinguishing feature is arguably its massive content library, which includes original video creations. And although the streaming giant has an impressive content selection to win over subscribers, content isn’t everything.

The media landscape is highly competitive, with countless other media companies all offering unique content libraries. Great content isn’t enough to repetitively attract people — especially not when there are so many media organisations with content that’s just as good as yours.

That’s why organisations need to give users access to highly engaging experiences outside of their content. Aside from personalised content recommendations and watch parties for computer users, Netflix doesn’t have much to offer people in terms of non-content-related engagement.

To encourage users to get into the habit of visiting your digital properties, you can integrate interactive experiences on your Web site or app and encourage users to socialise with one another. The more active your users are, the more likely they’ll be to return to your digital properties in the long run. In fact, Viafoura data reveals that interactive tools on publisher properties can raise user retention rates by 20%-40%.

Netflix still has millions of subscribers to profit from. However, it lacks the strategy and business flexibility to prevent crises like mass subscriber losses from taking place and damaging its brand.

Moving forward, video-streaming companies and publishers can protect themselves by doing what Netflix didn’t. More specifically, your company can become sustainable and resilient by shaping a solid retention strategy, diverse revenue streams, and engaging user experiences.

About Rebecca Alter

By continuing to browse or by clicking “ACCEPT,” you agree to the storing of cookies on your device to enhance your site experience. To learn more about how we use cookies, please see our privacy policy.