Concerning news from Netflix today. The streaming service reported that in the first quarter of 2022, it lost 200,000 subscribers — its first subscriber loss in over a decade. And its losses are expected to continue, as Netflix forecasts a global paid subscriber loss of 2 million for the second quarter.
This loss comes in behind the company’s previous estimates. The company told its shareholders it expected to add 2.5 million net subscribers during the first quarter. Analysts had been expecting 2.7 million subscribers.
The company explained the loss as being related to a number of factors. Notably, the suspension of its service in Russia led to a loss of 700,000 subscribers. Excluding that, Netflix says it would have instead seen 500,000 net subscriber additions in the quarter.
Other factors contributing to the loss cited by Netflix in its shareholder letter were varied. The streamer pointed to everything from password sharing to the competitive landscape and even to inflation to explain why it was doing so poorly. Netflix has recently been testing a feature that would address password sharing that would prompt subscribers to pay extra if they were sharing the service with people outside their own household.
In January, Netflix said it expected to add a smaller number of subscribers in the first quarter than it had in previous years because most of its highest-profile content was to be released toward the end of the quarter, including the second season of “Bridgerton” and “The Adam Project.” But this doesn’t fully explain the impact as Netflix ran several other popular shows during the quarter, beyond these higher-profile efforts.
The losses brought Netflix’s subscriber base to 221.6 million, down from 221.8 million in the prior quarter.
Revenue in the quarter reached $7.78 billion below analysts’ estimates of $7.93 billion. EPS came in a $3.53 vs $2.89 expected, however.
The company’s stock is plunging in after-hours trading on the news of the subscriber declines. Shares declined by 23% in after-market trading, eliminating $30 billion in market value.
More to come…