Netflix Grapples With 'Subscription Zombies' as Stock Price Declines
The streaming giant faces challenges from declining viewership engagement and increased competition, leading to a significant drop in its market value and recent layoffs.
Netflix is experiencing a rise in "subscription zombies"—customers who pay for the service but watch it infrequently—as the company faces flagging engagement and intense competition. This trend is contributing to a significant decline in Netflix's stock price and a broader reassessment of its strategy.
The term "subscription zombie" refers to subscribers who maintain their monthly payments for access to the platform's content but exhibit low viewing habits. Analysts note that while users may initially subscribe for popular shows like "Stranger Things" or "Squid Game," dwindling enthusiasm for newer content, described by critics as "shallow shockumentaries, derivative dramas, true-crime-by-numbers and endlessly recycled comedy series," is leading to decreased engagement. This has resulted in a plateau in the growth of minutes watched per individual consumer, increasing by only 2 percent in 2026.
This slowdown in engagement is reflected in the company's financial performance. Netflix's share price has fallen by nearly 30 percent in the past year, from $93.76 to $65.85, and has halved since its peak of $134 in June of the previous year. This represents a market value loss of approximately $300 billion.
Despite these figures, co-chief executive Ted Sarandos has indicated that a fundamental shift in strategy is not necessary, suggesting that "better execution in the U.S." is needed. However, this sentiment was followed by significant layoffs, with roughly 1,000 employees, or 6 percent of the workforce, dismissed. The chief content officer Bela Bajaria and head of films Dan Lin were among those let go.
Analysts at Morgan Stanley have observed that Netflix, once a disruptor, is now facing increased pressure to remain relevant in a crowded market. The company contends with numerous rivals, including Disney+, which is producing successful series like "Rivals" based on Jilly Cooper's novels, featuring a cast of well-known actors.
Other competitors include Apple TV with shows like "Slow Horses" and "Ted Lasso," and Amazon Prime with "Reacher" and "Clarkson's Farm." Even major franchises, such as the next James Bond film, are slated for Amazon release rather than Netflix.
While Netflix reported 325 million subscribers last year, and estimates suggest growth of around 13 percent in 2026, the company has stopped releasing regular subscriber figures. Instead, it emphasizes metrics like revenue.
This focus on revenue is further underscored by recent price increases in the UK. The basic plan with advertisements rose from £5.99 to £7.99 per month, a 33.4 percent increase. The ad-free plan saw a 7.7 percent increase to £13.99, and the premium tier, offering 4K Ultra-High-Definition and multiple screens, increased by 10.5 percent to £20.99 per month.
The rise in prices, coupled with a perceived decline in content quality, is expected to further fuel the growth of "subscription zombies." The article suggests that unless Netflix can re-engage its audience or improve its content offerings, it risks becoming irrelevant, similar to a "to the living dead."
