Expert: Why subscription future isn’t about episodic content
Instead, he believes that innovating the next ‘big thing’ in streaming a better measuring device. And, to that end, he believes that Netflix has a continued-rosy future in store. But first, the numbers. Netflix notes that subscriptions are down by about 1.5 million (Q2 2020 vs. Q2 2021), but Erich Joachimsthaler notes that after the huge increases in subscriber numbers in the height of the pandemic this is to be expected.
“The subscriptions of 1.5 million are down particularly compared to Q2 last year which was of course during the pandemic which isn’t a fair comparison quarter and the subscriptions are down relative to the first quarter, which is also somewhat expected given the opening after the pandemic,” said Erich Joachimsthaler, Founder & CEO, Vivaldi Group. “However, it is also a fact that it added 54 million subscribers in the last 24 months which is inline with previous pre-pandemic growth levels. And profits still have been growing significantly despite significant spending on exclusive movies and TV shows. Financially still a very solid company.”
The decrease in subscriptions, according to Joachimsthaler, can be attributed to coming out of a pandemic, and notes that streaming content still only accounts for about 27% of total screen time. This means there is still plenty of room to grow, both for Netflix and for other subscription services.
However, he notes that Netflix cannot become too comfortable with their current position – and neither should other providers. That is because to keep subscriber bases growing and engaged, services like this must innovate with additional types of content. That innovation is where he believes Netflix still has it’s hold on the public, because they’re going outside the streaming content box and adding gaming options to the base.
“Gaming is the big move because it increases consumers’ share of life,” said Joachimsthaler. “One the mobile device, Netflix can even more optimize their algorithm of understanding what consumers want, and can even more make consumers engaged. It can expand its content usage beyond the TV streaming and create entirely new experiences. Gaming can be a big strategic transformation for Netflix – changing from being a successful streaming company of content to becoming a platform and digital ecosystem that deeply integrates into the lives of consumers (in my book, I call this the interaction field company) and that uses its interactions with consumers to deliver multiple entertainment services, and in the future, much more than just entertainment.”
This change in the value exchange between Netflix and its consumer base is another sign that Netflix shouldn’t be worried about the decrease in subscriber growth, says Joachimsthaler.