Netflix loses subscribers for the first time in 10 years
Posted on 2022 Apr,21  | By ArabAd's staff

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On Tuesday April 19, Netflix announced it lost 200,000 global subscribers in the first three months of the year. While that drop was less than 0.1 percent of its total customer base, it marked Netflix’s first decline in subscribers in more than a decade. The bad news sent Netflix shares down more than 30 percent — a 50 billion U.S. dollar loss — on Wednesday. 

Netflix shares opened today at around 226 U.S. dollars. In November, Netflix traded at 691 dollars per share.

Netflix was expecting to add 2.5 million subscribers in the first quarter of 2022, but did not hit that target. The suspension of its business in Russia cost it 700,000 subscribers, and without that loss, Netflix would have added 500,000 paid global users, which is still well below its projections.

In the United States and Canada, Netflix lost 600,000 customers, due to recent pricing changes. Netflix said this subscriber loss was anticipated and in line with expectations.

The loss of subscribers and the company’s various plans to revive business “change the historically simple story” of Netflix’s solid success, said Wells Fargo analysts, who cut its price target in half.

The company anticipates a much larger drop in its second quarter – of around two million net subscribers.

To attract viewers, Netflix is preparing cheaper subscriptions with advertising – which it expects to roll out in the next couple of years.

The company also says it will focus more on converting the 100 million households who watch Netflix for free thanks to shared passwords to paying customers.

“When we were growing fast, it wasn’t the high priority to work on,” co-founder Reed Hastings admitted. “And now we’re working super hard on it.”

To mitigate the continued losses, Hastings said that in addition to addressing password sharing, the company is considering a more affordable, ad-supported plan within a year or two.

Going forward, Netflix said that it plans to implement "more effective monetization of multi-household sharing," which suggests that Netflix will soon enact measures to prevent account sharing. Netflix in March began testing an extra payment for those who share their Netflix accounts with people outside their households.

Chief operating officer Gregory Peters said Netflix wasn’t trying to shut down sharing, “but we’re going to ask you to pay a bit more to be able to share.”