Netflix’s recent strong subscriber growth in Latin America & the Caribbean has begun to shrink. Omdia’s Juan Villegas explains why the streaming giant’s strategy in the region may not have gone entirely to plan.
Following a massive jump in 4Q22, Netflix lost subscribers in Latin America & the Caribbean during the first quarter of the year, being the only region to decline.
After a disruptive year, the streaming giant gained around 1.5 million net additions in 4Q22. Still, Netflix is starting to see that its strategies, including the price reduction in several smaller regional territories, may not have worked as expected.
Impact assessment and outlook
After gaining the most subscribers at the start of the Covid-19 pandemic, and its rollout of the “Basic with Ads” plan in Mexico and Brazil, Netflix has had a relatively good start to its new plan, with the operator also decreasing its prices in some territories, mainly in Central America and the Caribbean.
Despite these efforts, Netflix saw its most significant decline since it launched in the region. This indicates that viewers are no longer fully loyal to streaming services, increasing the trend of churners or online video nomads.
With this type of reaction, streamers face the possibility of overall flat growth in net additions as viewers focus on watching a specific show, then cancel the relevant service and migrate to another based on their particular watchlist. The streamer said this decline was a “logical retraction” after such buoyancy.
This is not to say that Netflix will face an imminent decline. Despite its unpopular policies during 2022 with password sharing, where Latin America was the testing ground, the streamer announced it would expand some of the measures, such as the sub-account feature, over 2023. Indeed, according to the streamer, it saw new sign-ups and sub-accounts over the year as a result.
This assessment was taken from Omdia’s TV & Video Industry Developments Impact Brief – April 2023, which is available to read in full here.