In 2022, Netflix made the riskiest decision in its history: the "Great Correction" led him to win the streaming war

In 2022, there was a turning point in the history of Netflix, an absolute turn in its strategy that we all remember because many analysts believed they saw in that decision the beginning of the end of the platform. Its shares plummeted, the public seemed to turn its back on it… and it won the war of the streaming. An initially unpopular decision that has ended up granting it absolute preeminence over its competitors.

All against Netflix. The pressure Netflix had to bear before spring 2022 was unprecedented. In a very short time, competitors such as Disney+, which had a roaring start since its arrival in homes at the end of 2019, or the more exclusive Apple TV+, had emerged. A couple of years later, Warner reformulated its HBO with the birth of HBO Max, clearly aimed at competing with the newly born new platforms. All of them followed Prime Video, the oldest, which reinforced its catalogue with more and more of its own productions. They were joined, in the US alone, by Peacock and Paramount+.

Debacle revealed. In the spring of 2022, Netflix revealed to its investors at its first quarterly meeting of the year that it was experiencing a real loss of subscribers: specifically, it had lost around 200,000, a figure that led to a drop in its shares of no less than 25%. Many reasons were put forward at the time, one of which could be its overflowing release schedule, which led to 79 films being released per month in 2020. All this was happening at a time when competitors such as Disney+ were growing without any apparent restraint.

Emergency measures. Among the measures that Netflix proposed to its investors to stem this loss of subscribers was a series of cheaper subscriptions with advertising. But above all, there was a more radical decision: to end the possibility of unlimited account sharing, which Netflix had strategically supported since its inception as a smart way to make itself known. We all remember the massive reaction of customers to the announcement: such a move would cost the platform dearly. And here we are.

“The Great Correction” That was the name given to this risky move by Netflix, and it has brought it to where it is: since account sharing stopped being possible in May 2023, the platform has added 45 million subscribers and its share price has increased by more than 300%. Of course, one thing is not directly related to the other. It is simply that Netflix has implemented a general change of strategy, which coincided with the departure of Reed Hasting as CEO and the arrival of Greg Peters and Ted Sarandos, who share the chair.

Little by little. Peters himself was in charge of testing the shared account movement in very specific markets at the beginning of 2023: Chile, Costa Rica and Peru. And it was not the only change of direction that Netflix had up its sleeve. In the fall of the previous year, it had presented the aforementioned system of programs with ads in a series of cheaper subscription plans. To complete the announcement, it showed a list of ten programs that would include them: its ten most-watched programs.

Enjoying other people’s misfortunes. As reported by the Financial Times in An article that reviews the platform’s meteoric riseNetflix no longer has to invest huge amounts of money to attract big names in the audiovisual world, such as Martin Scorsese or Shonda Rhimes: with its current status, it is the big names who are fighting to work with Netflix. This is added to the fact that in times of crisis in the traditional film industry, Netflix remains a platform on which one can work: it happened during the pandemic (where the use of all platforms skyrocketed) and it happened again with the recent writers’ strike and the following months, when subscriptions continued to grow.

Only advantages. This newly acquired status as a winner in the platform war has even allowed it to reduce the level of investment in its own productions. According to the Financial Times, the platform has thus been able to reduce the investment it was spending from $17 billion a year until 2022 to $13 billion during the strikes last year. For the moment, it remains at that level, although sources from the platform say that they might consider raising the amount again later.

Many factors. Netflix’s current dominance over its competitors is the result of numerous strategic moves, some more obvious than others. We must not forget how it is becoming a binding force for third-party licenses, or how there are bets that may be changing the near future of the platform, such as its production of video games or the broadcasting of live events. These are the latest chapters of an evolution that had a very clear turning point in 2022.

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