On-Demand Video giants, Netflix has reportedly lost about 200,000 subscribers in the first quarter of 2022, making it the first time it is losing subscribers in the last ten years.
According to reports, the slide in subscriber base is expected to continue into the year. The streaming giant’s share price also initially plummeted to 20% following the news on the loss.
In a surprise move Netflix executives said they were now open to adding advertising to the service – in return for a lower-priced subscription. Netflix co-founder and chairman Reed Hastings has long been opposed to adding commercials or other promotions to the service.Advertisement
The company blamed the drop on a number of factors, including its huge size, increased competition, the economy, the war in Ukraine, slowing rollout of broadband, and the large number of people who share their Netflix accounts with non-paying households. It also said the decision to close up shop in Russia cost the company 700,000 new additions.
Netflix said in a note to investors: “Streaming is winning over linear, as we predicted, and Netflix titles are very popular globally. However, our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds.”
The company recently announced a crackdown in Chile, Costa Rica and Peru on people sharing their Netflix accounts with other households. It is expected to expand the scheme.
According to its latest financial report, on top of its 222m paying households, Netflix is being shared with over 100m additional households, an issue that makes it “harder to grow membership in many markets” and a problem that was obscured by the company’s growth during the pandemic.
“Our plan is to reaccelerate our viewing and revenue growth by continuing to improve all aspects of Netflix – in particular, the quality of our programming and recommendations, which is what our members value most,” Netflix said.
Hastings said Netflix was also looking at the range of its plans and was weighing whether to add a cheaper, ad-supported subscription as “a consumer choice”, a model he has avoided in the past.
The decline brought Netflix’s paid global subscriber base to 221.6 million, down from 221.8 million in the prior quarter. The company made $1.6bn in profit over the quarter on $7.8m in sales.
