Netflix, one of the most talked-about OTT platforms is experiencing its first subscriber loss in more than a decade. This loss resulted in sending its share down 25% in extended trading amid fears that the trailblazing streaming service has passed its prime. According to the company’s quarterly earnings report released on Tuesday, its customer base has fallen by 2,00,000 subscribers between January and March. From the time Netflix services were made available in the world, the subscriber count has declined for the first time. The reason behind this decline is expected to be Netflix’s decision to withdraw its services from Russia to protest the war against Ukraine. This decision has resulted in the loss of 7,00,000 subscribers.
The platform has around 221.6 million subscribers, loss in customers was lastly reported in October 2011. Netflix forecasted a 2 million subscriber loss in the spring quarter, despite the return of such highly anticipated series ‘Strange Things’ and ‘Ozark’ as well as the debut of ‘The Grey Man’ which was starring Chris Evans and Ryan Gosling. According to the Refinitiv data, Wall Street expected 227 million for the second quarter.
Here are the reasons why Netflix lost 200,000 subscribers in the first-year half of the year:
Netflix considerably thinks, that the time it takes for homes to get access to affordable internet service and smart TVs, as well as the subscribers sharing their accounts with people who don’t live in their homes, are the factors which are impeding growth.
According to the streaming giant, nearly 222 million households pay for the services, accounts are being shared with over 100 million other households that don’t pay for the streaming services.
Netflix quoted “account sharing as a percentage of our paying membership hasn’t changed much over the years, but, coupled with the first factor, means its harder to grow membership in many markets”.
Adding a feature that allows subscribers to pay a small fee to add other households, was one of the tactics implemented by Netflix last year, to make money from people sharing accounts.
Another factor that has been negative for Netflix is its intense competition in the market which involves Apple and Disney.
On the matter of ‘doubling down’ on content creation, Netflix made a statement that “Our plan is to re-accelerate our viewing and revenue growth by continuing to improve all the aspects of Netflix- in particular, the quality of our programming and recommendations”.