Netflix Loses 200,000 Subscribers And Drops 35% On The Stock Market
Netflix just lost a considerable amount of subscribers in the first quarter of the year. The exact amount is unknown, but the estimate is that Netflix lost around 200.000 subscribers. The quarterly report reflected this figure, which alarmed the shareholder’s meeting and also had a significant impact on the stock market, dropping Netflix’s stock value by 35%.
The loss primarily comes from two factors. The first one is the loss of 700,000 subscribers due to the sanctions on Russia. It is the first time one of the streaming giants has lost that amount of subscribers. Netflix gained 500,000 subscribers back, but this was not enough to overcome the loss, having such a deficit.
Image Credit: Netflix
Another problem the company faces in subscriber growth is its shared password policy. This policy allows having one account on multiple TVs and homes, which has made it challenging to create more subscribers. Netflix has thought about monetizing this option without losing more subscribers, although the first measures have not been successful.
Netflix Loses Subscribers after Announcement Against Password Sharing
After losing subscribers from Russia and other countries with quite complicated political situations, another factor is causing subscribers to switch platforms or not renew. And that is the change in Netflix’s policy against password sharing.
According to these measures, sharing an account among several households will no longer be accessible. For this, users will pay a shared fee between homes and other fees. Netflix took these measures due to the reduction in revenue that the streaming platform had been experiencing.
Netflix also took other measures in other parts of the world. However, the acceptance of the same has not been so good. Some people have stopped paying for the platform’s subscription, causing Netflix to lose much presence in the homes in the different world markets.
Image Credit: Netflix
Netflix passed a letter to shareholders explaining the situation with growth “slowing considerably.” They also added, “Our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds.” the letter reads. “The big COVID boost to streaming obscured the picture until recently while we work to reaccelerate our revenue growth – through improvements to our service and more effective monetization of multi-household sharing – we’ll be holding our operating margin at around 20%.”
The letter continues by saying, “So early last year we started testing different approaches to monetize sharing and, in March, introduced two new paid sharing features, where current members have the choice to pay for additional households, in three markets in Latin America.” the letter continued. “There’s a broad range of engagement when it comes to sharing households from high to occasional viewing. So while we won’t be able to monetize all of it right now, we believe it’s a large short- to mid-term opportunity.”
Netflix Shares Plummet
The whole situation has sent shares on Wall Street plummeting 35%. That implies a significant loss for shareholders, looking at the situation and studying possible ways to reverse the crisis. Netflix is also looking for different alternatives to obtain more subscribers again without having considerable economic losses.
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
As we can see, the intense competition in streaming platforms, the political situations, and the measures taken by Netflix have been a hard blow in this quarter. Its subscriber index dropped, and also the company’s value. We will have to wait to see what measures they take to reverse this.
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Featured Image via Netflix