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Netflix Shares Collapse After First-Quarter Net Loss of 200,000 Subscribers

Netflix shares took a tumble yesterday after the company announced that it had lost 200,000 subscribers in the first quarter of 2022. 

This marks the first time Netflix has seen a loss in subscribers in 10 years. The company’s stock price plummeted by over 35% as a result. 

To add insult to the injury, the streaming giant expects to lose over two million subscribers in the following months. 

The sudden price drop of Netflix’s shares was attributed to wiping around £42 billion off its value.

The fact that numerous competitors are vying for subscribers’ streaming dollars was only one of the reasons for the company’s increasing loss in subscribers. Production delays from the pandemic, and the service’s price increase, all had a part in it.

Globally, Netflix has a strong chokehold on TV show enthusiasts. The service has 222 million subscribers, not counting the password sharing. 

While we’re on the subject of password sharing, the company announced not so long ago that it’s running a test to potentially start charging users who share their passwords with others. This was met with disapproval from customers already disappointed about their increased monthly subscription prices.

Netflix has been steadily increasing its monthly fees worldwide, with some UK customers now paying a third more than they did two years ago for the same service.

According to Netflix, the decrease in subscribers was due to various reasons, including its large size, increased competition, the economy, the war in Ukraine, broadband rollout delays and the large number of people who give their Netflix accounts to non-paying guests. Furthermore, the decision to close on Russia ended up costing the company 700,000 new additions.

In a note to their investors, Netflix said: “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”.

According to its most recent financial statement, Netflix is being shared with nearly 100 million households, on top of its 222 million paying households, making it “more difficult to increase membership in many markets”.

“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 added.

The company has been implementing new ways to stay on top of the competition, such as last year’s decision to introduce video games for free

Yet another upsetting news — Netflix is now “open” to offering lower-priced subscription tiers with advertisements, according to co-CEO Reed Hastings. For years, the streaming giant has fought against advertisements on its service.

“Those who have followed Netflix know that I have been against the complexity of advertising and a big fan of the simplicity of subscription,” Hastings said. “But as much as I am a fan of that, I am a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and are advertising-tolerant to get what they want makes a lot of sense.”

However, Hastings pointed out that this option likely wouldn’t be available for another year or two. 

“It’s pretty clear that it’s working for Hulu. Disney is doing it. HBO did it,” Hastings added. “I don’t think we have a lot of doubt that it works.”

For now, I guess our only option is to wait and see what Netflix comes up with and follow up with a report.