We’re big fans of streaming media here at Lab42, which is why we completed studies on the streaming industry in both 2018 and 2021 to identify trends that would give us insights into the industry. While many people were shocked to see Netflix lost over 200,000 subscribers, the team at Lab42 had seen the writing on the wall.

Data from our 2021 research indicated that although Netflix was still the dominant streaming service, there were signs of trouble:

• Decreasing market share: its market share decreased nearly 15 points vs. 2018 (from 89% in 2018 to 74% in 2021). Of course, the overall number of streaming customers increased during those years, but Netflix’s share did not keep up with this growth in subscribership. 

• Expanding market share from competitors: Based on our findings, Netflix’s market share decrease was the result of:

  • Existing streaming services increase in popularity:

    • Amazon Prime Video 53%, up from 46% in 2018

    • Hulu, 45%, up from 28% in 2018

  • Emergence of new streaming services:

    • Disney+: 34%

    • Peacock: 17%

    • HBOMax: 16%

• Decrease in exclusive subscribers: From 2018 to 2021, Netflix actually lost a large percentage of exclusive subscribers - those people who only subscribed to one streaming service. While in 2018 Netflix could boast 25% exclusive streamers, that fell 17 points to 8% in 2021. 

• Decrease in retention rate: Netflix’s subscriber retention rate was also already decreasing in 2021 compared to 2018 numbers. Although Netflix was on top with a 89% retention rate in 2021, it had fallen 4 points from 2018 when it had a retention rate of 93%. 

These data points, along with the increased subscription costs for Netflix, were certainly not conducive to supporting more subscriber growth. Paired with the upcoming crackdown of password sharing on Netflix, the company is going to have a very difficult time creating more revenue from their existing user base.

Our recommendation from 2021 still holds true: 

“With more streaming services entering the market, fighting for the same pool of viewers, these services need to up their game: deliver more and better content, better offers, more features, etc. What this means for consumers is more choices, content they actually want to see when they want to see it, for a better value.”