During the pandemic, streaming services like Disney+ and Netflix saw a boom in subscribers. With people staying at home due to the lockdowns, they decided to try out one of the many services available. Now, things have shifted as movie theaters and other sources of entertainment are opening back up. With a variety of streaming services available, companies have to find ways to set themselves apart from the rest and sell their services.
Netflix did not reach its subscriber estimatein Q1 of 2021. Disney+ also fell short. Though 110 million subscribers were expected,the company reported 103.6 million.
There are several factors that seem to be contributing to the slowed growth. “It really boils down to COVID, frankly,” said Netflix CFO Spencer Neumann in the company’s earnings video. “We had this huge pull-forward in 2020 in terms of our subscriber additions, nearly 40 million paid net adds in 2020.” Because so many people subscribed in 2020, there are fewer people interested in subscribing this year.
Content plays a role, too. Due to the pandemic, less content was able to be produced. With studios shut down and production delayed months ago, there are now fewer shows and movies available on streaming services. Without new content for subscribers to watch, customers don’t have a reason to subscribe. Now, production is picking back up as the world returns to normal, so subscribers should have new content to enjoy soon.
While Disney+ and Netflix are going to have to make adjustments as their growth slows, other companies may have already found a way to keep customers subscribed. HBO Max and Paramount+ are a couple of the services that offer ads in exchange for a lower monthly cost. At this point, neither Disney+ nor Netflix offers ad-supported subscription tiers, but this may be something for the companies to explore.
According to an Adweek-Morning Consult survey, nearly half of streaming subscribersprefer ad-supported options. “Ad-supported streaming is now foundational,” says Andre Swanston, CEO of the Trans Union-owned streaming data and measurement firm Tru Optik. “I think it was almost a business imperative. My biggest surprise is that Netflix still hasn’t pivoted to do the same.”
Streaming companies will have to do something different, such as introducing new content, unique features, or an ad-supported tier, to survive in this market.