San Francisco (AP) — Netflix suffered its first subscriber loss in more than a decade, and stocks plummeted 25% amid concerns that pioneering streaming services may already be at their best. ..
The company’s customer base lost 200,000 subscribers between January and March, according to a quarterly earnings report released Tuesday. It’s the first time Netflix subscribers have declined since streaming services became available in most regions outside of China six years ago. This year’s decline was partly due to Netflix’s decision to withdraw from Russia in protest of the war with Ukraine, resulting in the loss of 700,000 subscribers.
Netflix acknowledged that the problem is deeply rooted by predicting an additional 2 million subscribers will be lost during the April-June period.
If the stock price decline extends to Wednesday’s regular trading session, Netflix shares have lost more than half of their value so far this year and will wipe out about $ 150 billion in shareholder assets within four months. Become.
Netflix wants to reverse the tide by taking steps that it previously resisted, such as blocking account sharing and introducing a version of the service that supports ads at a lower price. ..
David Wagner, an analyst at Aptus Capital Advisors, said it’s clear that Netflix is tackling an impressive challenge. “They aren’t in (two) human lands,” Wagner wrote in a study note on Tuesday.
Netflix has absorbed the biggest blow since losing 800,000 subscribers in 2011. This is a result of plans to start billing individually for the streaming service at that time, which was bundled with the conventional DVD-by-mail service for free. Customer opposition to the move drew an apology from Netflix CEO Reed Hastings for failing to perform the spin-off.
Recent subscriber losses were far worse than Netflix’s management predicts the modest profits of 2.5 million subscribers. The news deepens the growing problem for streaming since the surge in applications from viewers caught during the pandemic began to slow.
This is the fourth time in the last five quarters that Netflix subscriber growth has fallen below the previous year’s growth. This is an increased fatigue caused by intensifying competition with well-financed rivals such as Apple and Walt Disney.
The setback was due to the company’s addition of 18.2 million subscribers in 2021, the lowest annual growth rate since 2016. Provides a stockpile of original programming.
Netflix had previously predicted it would regain momentum, but faced a problem on Tuesday. “COVID has caused a lot of turmoil in how to read the situation,” Hastings said in a video conference reviewing the latest numbers.
In particular, Hastings has confirmed that Netflix has begun cracking down on subscriber password sharing, allowing multiple households to access the service from a single account, and changes could be rolled out next year or so.
A company in Los Gatos, California estimates that about 100 million households worldwide are watching the service for free using accounts from friends and other families, including 30 million in the United States and Canada. .. “They already have more than 100 million households choosing to watch Netflix. They like the service. They need to get some reward,” Hastings said.
Netflix has shown it to grow in order to break the habit and encourage more people to pay for their accounts Tests introduced in Chile, Peru and Costa Rica last month This allows subscribers to add up to two people living outside the household to their account for an additional fee.
Netflix ended in March and had 221.6 million subscribers worldwide. The subscriber recession squeezed Netflix’s finances in the first quarter when its profits fell 6% from last year to $ 1.6 billion, or $ 3.53 per share. Revenues increased 10% from last year to nearly $ 7.9 billion.
With the mitigation of the pandemic, people are finding something else to do, and other video streaming services are working hard to attract new viewers with their unique award-winning programming. For example, Apple had exclusive streaming rights to “CODA,” which surpasses movies such as Netflix’s “Power of the Dog,” to win an Academy Award for Best Work last month.
Rising inflation over the past year has also put pressure on household budgets, with more consumers restraining spending on discretionary items. Despite that pressure, Netflix recently raised prices in the United States, which has the highest household penetration and the hardest part of increasing subscribers. In the last quarter, Netflix lost 640,000 subscribers in the US and Canada, and management was urged to point out that most of future growth will take place in the international market.
Netflix is also trying to provide people with another reason to subscribe by adding video games at no additional charge — function It started rolling out last year.
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Netflix’s share will drop 25% after the service loses 200,000 subscribers | Associated Press
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