Netflix is not-flixing too well these days — it is the latest unexpected casualty of the Russian-Ukraine conflict. The company has apparently lost net 2,00,000 subscribers globally in the first quarter of 2022. Oof! And you ain’t seen nothin’ yet. There is news of the company expecting a net reduction of another two million subscribers over the next three months. More oof! Its share price tumbled more than 35 per cent last week, causing contagion effects on other entertainment stocks as well. Perhaps it might be a good time for Netflix to do a movie on The Oof on the Wall Street.

What has really happened? Netflix seems to be afflicted by three problems, namely Putin, Putin and Putin.

The first Putin has raised energy and fuel prices across the globe, single-handedly adding 150 bps to global inflation. This has raised costs for all companies and Netflix has been passing on higher costs to its subscribers globally. Most of its European subscribers have been grumbling about the prices having gone up by nearly a third in the past two years. Today, given such high Put-in-flation levels, consumers are simply unwilling to pay extra for non-essentials.

One could have gotten away with those price hikes in 2020, with inflation at an all-time low and demand for streaming content at an all-time high. Now, of course, with the globe getting back to office and schools, highly interesting and gripping content is actually available in real life, reducing the need for the reel-based stuff. Just imagine!

In the past two years, most of us have sorely missed getting stuck in a traffic jam and staring hypnotically at the bumper of the car in front of us while all other lines but ours move on. The client yelling at you on phone has been replaced by the man actually storming into the office to yell at you and another couple of colleagues. Interesting to see him turn green, red and then a pale blue in quick succession. Teachers have the fascinating option of actually seeing blank faces around them rather than blank screens. And most have been in revenge mode, waking up the young innocents just when they nod off sweetly in the midst of an economics class.

I am not saying it’s always fun, but well, you can’t deny that life is infinitely more interesting these days than it was in the lazy ole lockdown period. And, of course, the first Putin has made life simply fascinating. Even a trip to the petrol pump is enough to get most people excited in terms of guessing how much more the petrol will cost today. The humblest of lemons has become a gem that one simply pines for. So, whether it is irritation, fright, tensions or expectations, life is at work and is providing full-time entertainment to its mortal creatures. People are just not inclined to buy more Netflix entertainment at higher prices in 2022, when oil prices are already burning a hole in their pockets.

The second Putin is more local. Due to the invasion of Ukraine by Russia, Netflix has suspended 700,000 accounts in Russia. Had it not been for these, the net gain in subscriber base would have been positive. To add to its troubles, Netflix is also facing a class-action lawsuit in Russia for loss in service to the users.

Password sharing

Now, the third Putin is not so much a noun as a verb. Netflix is struggling with the problem wherein their subscribers Put-in the password of their friendly neighbours/family members, thereby getting virtually free virtual content. Netflix estimates that nearly 100 million users access their content from other subscribers through password sharing. On a base of 222 million subscribers, this implies that there is potentially another 45 per cent revenue to be gained from free users of the service.

While a global debate rages on how to control the menace of free users, Indians have shrugged off this story in a rather philosophical, matter-of-fact way. After all, there is an entire senior generation in the country that has shared devices such as phones and TVs with neighbours, how could we get hot and bothered about sharing simple passwords? And just think of all those small-time operators who have got power for their gypsy engineering workshops by virtue of simply taking the power from the closest overhead line. Easy-peasy. State Electricity Boards have been our very own Netflix operators, haven’t they?

Netflix could launch a new series on its own story — it should be a real potboiler to watch. They better take ‘The Call’ correctly, else we will have to watch ‘How it ends’.

The author is a brave economist trying to laugh against the odds

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