On April 19, US streaming giant Netflix (Netflix) announced a first quarter 2022 report showing a net profit of $1.6 billion, down 5.9% year-on-year.
More serious than the decline in performance is that Netflix's global subscriber number in the first quarter was 221.64 million, a decrease of 200,000 people from the previous quarter.
As the benchmark of the global long video platform, after years of high progress, Netflix finally can't fly.
Affected by the performance thunderstorm, Netflix's stock price plunged 35% after the release of the earnings report.
In terms of the elongation cycle, its stock price has fallen by 73% since November last year, and its market value has evaporated by more than 220 billion US dollars (about 1.47 trillion yuan), which is equivalent to evaporating two BYD...
The MYTH of the US stock market of the long bull for more than 10 years, why did it fall in 2022?
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In the past 10 years, Netflix has created a legendary high growth in the field of long video, and it is also a US stock myth that is 100 times the stock price in 10 years.
Founded in 1997, Netflix first started with renting movies, and then the rental DVD model gradually declined, and Netflix embarked on the road of self-made content.
In 2013, Netflix spent a lot of money to produce and invited oscar film emperor Kevin Spacey's political drama "House of Cards" to detonate the world after the launch, paying users surged, and since then embarked on the road of "blockbuster".
After "House of Cards", Netflix has successively launched a number of high-quality self-made dramas such as "Hemlock Bush", "Women's Prison", "Squid Game" and so on, and its long-lasting boutique image has made it famous and rich.
Taking the 2021 blockbuster "Squid Game" as an example, the third quarter of last year was stimulated by this drama, and the number of new paid users of Netflix worldwide reached 4.38 million, up 100% year-on-year.
At the same time, "Squid Game" is also the most high-rated original program of Netflix, creating a value of 900 million US dollars for Netflix, becoming the most valuable streaming TV series in the history of Netflix.
With an endless stream of high-quality content, the number of Netflix paid users has grown year after year, and by the end of 2021, it has 222 million paid members worldwide.
Benefiting from the number of paid members and rising prices, Netflix's annual revenue increased from $3.2 billion to $29.7 billion from 2011 to 2021, and its net profit soared from $226 million to $5.11 billion.
Amazing performance growth, in exchange for a magnificent stock price bull.
From a low of $7.54 in 2012 to $700 in 2021, Netflix's stock price has soared nearly 100 times as high as ever. Because of the business myth of Netflix, iQiyi, one of the three giants of China's long video, has been calling itself "China's version of Netflix" after the US stock market was listed, but US stock investors did not buy it.
Netflix's core profit model lies in paid membership, and once the number of members turns into a decline, it will naturally seriously hit investor confidence.
Starting in the fourth quarter of 2021, Netflix's stock price was adjusted due to concerns about the disappearance of the home economy dividend and the slowdown in user growth.
On January 21 this year, Netflix's 2021 annual report confirmed this concern.
According to the annual report, Netflix's new paid users in 2021 will be 18 million, far lower than the new 37 million in 2020. Affected by this, its stock price fell 21% on the day.
By the time the first quarterly report was released on April 19, the number of paying subscribers had begun to decrease by 200,000 month-on-month, worse than the expected slowdown in growth.
At this point, Netflix's high growth of more than 10 years has been shattered, and its stock price has plummeted by 73%, bidding farewell to the 100-fold myth and completely entering a bear market.
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For the thunderstorm in the first quarter, Netflix gave many reasons, but avoided the core price increase factor.
The reasons Netflix pointed out in its earnings report include "too many shared users, fierce competition on streaming media platforms, slow economic growth, rising inflation, the Russian-Ukrainian conflict, and the continued impact of the epidemic."
First among them is the Russian-Ukrainian conflict, Netflix pointed out that the suspension of services in Russia in the first quarter, resulting in a reduction of 700,000 paid users, if deducted from this impact, the first quarter of the paid users increased by 500,000.
In fact, this is not the case, Netflix paid users fell 200,000 month-on-month in the first quarter, and last year's forecast was originally to increase by 2.5 million. Even without the Russian-Ukrainian conflict, the growth of 500,000 users was significantly lower than expected.
Shared users refer to non-paying users, and Netflix expects more than 100 million other households to share in addition to 220 million paying households.
This means that 1 in every 3 Netflix viewers in the world is in the "white prostitute", in order to reverse the performance in the future, it is not excluded to open the knife to these 100 million shared users.
In terms of peer competition, Netflix pointed out that "over the past 15 years, linear TV and YouTube, Amazon and Hulu have been fiercely competitive."
In addition, Netflix competitors also include giants such as Disney, Apple, and Warner, whose streaming media is eating away at Netflix's share.
In addition to these factors, Netflix did not mention the key to the decline of paying users - membership fee increases.
As a platform that does not rely on interstitial advertising, but only relies on paid members to make profits, Netflix's past price increase strategy has obvious effects.
Since 2019, Netflix has been raising prices almost every year, but it has not affected the new highs of revenue and net profit.
From 2019 to 2021, its net profit was US$1.867 billion, US$2.76 billion and US$5.11 billion, respectively. This proves that in the two years after the outbreak of the epidemic, Netflix has taken full advantage of the "home economy" dividend, and the number of paid users and the price volume and price have increased together.
But in the post-pandemic era, the home economic dividend is receding, and Europe and the United States are facing the highest inflation in 40 years. Oil prices, rent and other prices continue to soar, so that American families learn to reduce unnecessary expenses, at this time Netflix's price increase strategy will undoubtedly be ineffective.
In the first quarter of this year, Netflix rose again in the US and Canadian markets, with the lowest monthly package rising by $1 to $9.99 and the standard package up $1.5 to $15.49.
Netflix expects that the price increase will increase annual revenue by $1 billion, resulting in 600,000 US dollars and Canadian users directly choosing to leave. Yes, in the era of high inflation, long video members can't sell, even if they are as strong as Netflix.
The shattering of the Netflix myth once again proves that long videos are not just needed, high-sticky businesses after all, and in this fragile business model, in addition to content creators, platforms and users are not winners.
The three giants of youaiteng in China have been imitating Netflix's self-made explosion in the past, and the way of membership fee increases, the result is that the price increase has been learned, and the continuous explosion has not been learned.
For example, in December 2021, iQIYI's monthly subscription members were raised from 25 yuan to 30 yuan, and continuous monthly subscription members were raised from 19 yuan to 22 yuan;
In April 2022, Tencent Video's consecutive monthly subscriptions rose from 20 yuan to 25 yuan, and the consecutive annual subscriptions rose from 218 yuan to 238 yuan.
All are price increases, even if Netflix users decline, there is a net profit of 1.6 billion US dollars in the first quarter, but Youaiteng is still in a huge loss.
In the Chinese market, where payment habits have not yet been popularized, it is difficult for long-form video platforms to achieve profitability through continuous price increases in the short term.
In the era of high inflation, it is difficult for global economic growth to return to the past in the short term.
Nowadays, Netflix without advertising can not move the price, and if you Aiteng, who has become a disaster in advertising, continues to be obsessed with price increases, perhaps paid members will lose faster.