Netflix Suffers From Subscriber Loss For The First Time In A Decade, May Withdraw Investment In Few Markets
Netflix suffered its first subscriber loss in more than a decade, causing its shares to plunge 25% in extended trading amid concerns that the pioneering streaming service may have already seen its best days.
Netflix
suffered
its
first
subscriber
loss
in
more
than
a
decade,
causing
its
shares
to
plunge
25%
in
extended
trading
amid
concerns
that
the
pioneering
streaming
service
may
have
already
seen
its
best
days.
The
company's
customer
base
fell
by
200,000
subscribers
during
the
January-March
period,
according
to
its
quarterly
earnings
report
released
Tuesday.
It's
the
first
time
that
Netflix's
subscribers
have
fallen
since
the
streaming
service
became
available
throughout
most
of
the
world
outside
of
China
six
years
ago.
The
drop
this
year
stemmed
in
part
from
Netflix's
decision
to
withdraw
from
Russia
to
protest
the
war
against
Ukraine,
resulting
in
a
loss
of
700,000
subscribers.
Netflix
acknowledged
its
problems
are
deep
rooted
by
projecting
a
loss
of
another
2
million
subscribers
during
the
April-June
period.
If
the
stock
drop
extends
into
Wednesday's
regular
trading
session,
Netflix
shares
will
have
lost
more
than
half
of
their
value
so
far
this
year
—
wiping
out
about
$150
billion
in
shareholder
wealth
in
less
than
four
months.
Netflix
is
hoping
to
reverse
the
tide
by
taking
steps
it
has
previously
resisted,
including
blocking
the
sharing
of
accounts
and
introducing
a
lower-priced
—
and
ad-supported
—
version
of
its
service.
Aptus
Capital
Advisors
analyst
David
Wagner
said
it's
now
clear
that
Netflix
is
grappling
with
an
imposing
challenge.
“They
are
in
no-(wo)
man's
land,”
Wagner
wrote
in
a
research
note
Tuesday.
Netflix
absorbed
its
biggest
blow
since
losing
800,000
subscribers
in
2011
—
the
result
of
unveiled
plans
to
begin
charging
separately
for
its
then-nascent
streaming
service,
which
had
been
bundled
for
free
with
its
traditional
DVD-by-mail
service.
The
customer
backlash
to
that
move
elicited
an
apology
from
Netflix
CEO
Reed
Hastings
for
botching
the
execution
of
the
spin-off.
The
latest
subscriber
loss
was
far
worse
than
a
forecast
by
Netflix
management
for
a
conservative
gain
of
2.5
million
subscribers.
The
news
deepens
troubles
that
have
been
mounting
for
the
streaming
since
a
surge
of
signups
from
a
captive
audience
during
the
pandemic
began
to
slow.
It
marks
the
fourth
time
in
the
last
five
quarters
that
Netflix's
subscriber
growth
has
fallen
below
the
gains
of
the
previous
year,
a
malaise
that
has
been
magnified
by
stiffening
competition
from
well-funded
rivals
such
as
Apple
and
Walt
Disney.
The
setback
follows
the
company's
addition
of
18.2
million
subscribers
in
2021,
its
weakest
annual
growth
since
2016.
That
contrasted
with
an
increase
of
36
million
subscribers
during
2020
when
people
were
corralled
at
home
and
starved
for
entertainment,
which
Netflix
was
able
to
quickly
and
easily
provide
with
its
stockpile
of
original
programming.
Netflix
has
previously
predicted
that
it
will
regain
its
momentum,
but
on
Tuesday
faced
up
to
the
issues
bogging
it
down.
“COVID
created
a
lot
of
noise
on
how
to
read
the
situation,"
Hastings
said
in
a
video
conference
reviewing
the
latest
numbers.
Among
other
things,
Hastings
confirmed
Netflix
will
start
crack
down
on
the
sharing
of
subscriber
passwords
that
has
enabled
multiple
households
to
access
its
service
from
a
single
account,
with
changes
likely
to
roll
out
during
the
next
year
or
so.
The
Los
Gatos,
California,
company
estimated
that
about
100
million
households
worldwide
are
watching
its
service
for
free
by
using
the
account
of
a
friend
or
another
family
member,
including
30
million
in
the
U.S.
and
Canada.“
”Those
are
over
100
million
households
already
are
choosing
to
view
Netflix,"
Hastings
said.
“They
love
the
service.
We've
just
got
to
get
paid
at
some
degree
for
them."
To
stop
the
practice
and
prod
more
people
to
pay
for
their
own
accounts,
Netflix
indicated
it
will
expand
a
test
introduced
last
month
in
Chile,
Peru
and
Costa
Rica
that
allows
subscribers
to
add
up
to
two
people
living
outside
their
households
to
their
accounts
for
an
additional
fee.
Netflix
ended
March
with
221.6
million
worldwide
subscribers.
The
subscriber
downturn
clipped
Netflix's
finances
in
the
first
quarter
when
the
company's
profit
fell
6%
from
last
year
to
$1.6
billion,
or
$3.53
per
share.
Revenue
climbed
10%
from
last
year
to
nearly
$7.9
billion.
With
the
pandemic
easing,
people
have
been
finding
other
things
to
do,
and
other
video
streaming
services
are
working
hard
to
lure
new
viewers
with
their
own
award-winning
programming.
Apple,
for
instance,
held
the
exclusive
streaming
rights
to
“CODA,”
which
eclipsed
Netflix's
“Power
of
The
Dog,”
among
other
movies,
to
win
Best
Picture
at
last
month's
Academy
Awards.
Escalating
inflation
over
the
past
year
has
also
squeezed
household
budgets,
leading
more
consumers
to
rein
in
their
spending
on
discretionary
items.
Despite
that
pressure,
Netflix
recently
raised
its
prices
in
the
U.S.,
where
it
has
its
greatest
household
penetration
—
and
where
it's
had
the
most
trouble
finding
more
subscribers.
In
the
most
recent
quarter,
Netflix
lost
640,000
subscribers
in
the
U.S.
and
Canada,
prompting
management
to
point
out
that
most
of
its
future
growth
will
come
in
international
markets.
Netflix
also
is
trying
to
give
people
another
reason
to
subscribe
by
adding
video
games
at
no
extra
charge
—
a
feature
that
began
to
roll
out
last
year.
(AP)
AMS
AMS