Netflix’s global subscriber base plunged for the first time in over a decade, sending its stock down by 25% in extended trading.
Netflix’s global subscriber base, according to the company’s quarterly financial report issued Tuesday, declined by 200,000 customers between January and March. It’s the first time Netflix’s subscriber base has declined since the streaming service went global outside of China six years ago. This year’s reduction was caused in part by Netflix’s decision to depart from Russia in protest of the conflict against Ukraine, which resulted in a loss of 700,000 subscribers.
Nonetheless, Netflix recognised that its troubles are deep-rooted, forecasting a loss of another 2 million users between April and June.
In 2019, the service also suffered a drop in subscribers in the United States.
However, the latest loss of subscribers is significantly worse than the predicted increase of 2.5 million subscribers by the Netflix management. The announcement adds to the streaming company’s woes, which have been increasing since a flood of subscriptions from a captive audience during the pandemic began to decrease.
“Our revenue growth has slowed significantly,” Netflix said in a letter to shareholders. “Covid masked the picture by greatly raising our growth in 2020, causing us to conclude that the majority of our decreasing growth in 2021 was caused by the Covid pull forward.”
It is the fourth time in the last five quarters that Netflix’s subscriber growth has lagged behind the previous year’s advances. Now, investors are concerned that its streaming service may be caught in a slump exacerbated by fierce competition from well-funded rivals such as Apple and Walt Disney.
As it aims to maximise income from existing users, the streaming behemoth has lately signaled that it would tighten the screws on consumers who share passwords and login information. And it’s not a minor issue: Netflix currently believes that up to 100 million households utilise the service using shared passwords. As a result of the scenario, “it’s difficult to develop membership in many markets,” according to Netflix.
Netflix’s Statements to cope with the loss
“Our strategy is to re-accelerate our viewership and revenue growth by improving all areas of Netflix.” “Specifically, the quality of our programmes and recommendations, which is what our members love the most,” Netflix stated in its earnings letter. “We’re doubling down on narrative creation and creative quality on the content side.” The streaming giant said, “On the product side, we just released ‘double thumbs up’ so members can better communicate what they actually love vs simply like, enabling us to continue to enhance our targeted suggestions and overall experience.” Netflix also claims that foreign success is vital to its long-term success. “Over the long run, much of our growth will come from outside the United States,” the business stated.
Netflix is also attempting to give users another incentive to subscribe by offering free video games, a service that began rolling out last year.