For the first time in 10 years, streaming giant Netflix has seen its subscribers drop. Investors react nervously.
Netflix loses 200,000 customers, shares collapse by 25 percent
Netflix has seen its subscribers dwindle for the first time in a decade. The news was not well received by investors either – the stock then fell by around 25 percent in trading, as also reported by Cnet.
200,000 subscriptions down – 2 million more losses in the next quarter
According to the quarterly report released on Tuesday, the share of subscribers fell by 200,000 in the period January to March. It’s the first time Netflix subscribers have dropped since the streaming service became available in most countries outside of China six years ago. The drop this year is partly due to Netflix’s decision to pull out of Russia in protest of Russia’s war of aggression against Ukraine, resulting in a loss of 700,000 subscribers.
According to the forecast, an increase of around 2.5 million subscribers was expected during this period. Now you have to record a decline in customers. And as the company itself says, this is probably just the beginning. Netflix is forecasting another 2 million subscriber losses for the April-June period.
Netflix stock plummets 25 percent
Netflix shares fell 25 percent in after-hours trading. By the time the US stock market closed, Netflix shares had fallen a total of 40 percent since the beginning of the year.
Still positive: Overall, Netflix reported earnings of $1.6 billion, or $3.53 per share, compared to $1.7 billion, or 3.75 cents per share, a year earlier. Revenue rose about 10 percent to $7.87 billion.
Netflix could continue to grow
The company continues to see the opportunity for growth, and also hopes for increased connectivity:
“It is becoming increasingly clear that the pace of growth in our underlying addressable market is dependent in part on factors beyond our direct control, such as the proliferation of connected televisions, the adoption of on-demand entertainment and the cost of data,”
the company said in a statement.
“We believe these factors will continue to improve over time, making all broadband households potential Netflix customers.”
Account sharing is a huge problem for Netflix
What is becoming more and more of a problem for Netflix, in addition to strong competition such as Disney+, is the sharing of accounts. The company estimates that around 100 million more households will join Netflix in addition to the 222 million paying users. Accordingly, the streaming giant is looking for ways to monetize these customers:
“Account sharing as a percentage of our paid membership hasn’t changed much over the years, but combined with the first factor, this means that in many markets it’s harder to grow membership – a problem that obscured by our COVID growth”
the statement said.
“While we won’t be able to monetize all of this right away, we believe it represents a great opportunity in the short to medium term.”
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