Netflix ended the first quarter of this year with 200,000 fewer subscribers, with about 220 million households subscribing to the service worldwide.
Netflix shares lost about twenty percent of their value on Tuesday after the company revealed that its tally of subscribers was lower than last year. The Silicon Valley tech firm reported a net income of $1.6 billion in the recently ended quarter, compared to $1.7 billion in the same period a year earlier. Netflix shares were down some 25 percent to $262 in after-market trades that followed the release of earnings figures.
#Netflix's customer base fell by 200,000 subscribers during the January-March period, according to its quarterly earnings report.https://t.co/onXbgDc90n
— The New Indian Express (@NewIndianXpress) April 20, 2022
It was the first time in a decade that the leading streaming TV service had lost subscribers. The company blamed the quarter-over-quarter erosion on the suspension of its service in Russia due to Moscow’s invasion of Ukraine.
“We’re not growing revenue as fast as we’d like … Covid clouded the picture by significantly increasing our growth in 2020,” Netflix said in an earnings letter. The factors that inhibit growth according to Netflix are the time taken for homes to gain access to affordable internet services as well as smart TVs.
EARNINGS: Netflix Q1 EPS $3.53 vs. $2.89 Est.; Q1 Revs. $7.87B vs. $7.93B Est. • $NFLX reports loss of 200K subscribers in Q1, forecasts subscriber loss of 2M next quarterhttps://t.co/S33O81Xy3c pic.twitter.com/dwE4CHr447
— CNBC Now (@CNBCnow) April 19, 2022
Apart from this, subscribers sharing their account details with others was found responsible for the downslide. “Account sharing as a percentage of our paying membership hasn’t changed much over the years, but, coupled with the first factor, means it’s harder to grow membership in many markets – an issue that was obscured by our Covid growth,” Netflix said.
Netflix is preparing to crack down on password sharing after losing 200,000 subscribers: https://t.co/AgJGnoHnpI pic.twitter.com/nHiE8qBFAw
— IGN (@IGN) April 19, 2022
Last year, the streaming giant adopted ways to make money from subscribers sharing their accounts. It mandated higher paid membership from those who wanted to ‘add households’.Apart from ‘soft acquisition’ across all regions, another factor that is possibly hindering its growth is cut-throat competition from other giants like Apple and Disney.
However, the bright spot is that Netflix has made good progress in the Asia-Pacific region,” where we are seeing nice growth in a variety of markets including Japan, India, Philippines, Thailand, and Taiwan,” said Netflix.
Also, Netflix recently announced that it will be rolling out cheaper, ad-supported tiers to consumers over the period of two years. The move is expected to woo many potential subscribers.
References: NDTV, Business Standard, Best Mediainfo
Featured Image Source: NDTV
