Streaming service Netflix has lost 200,000 subscribers worldwide in the first three months compared to the end of 2021. In addition, it was the first time since 2011 that Netflix saw users leave. As a result, the stock lost more than 24 percent.
The streaming service had expected 2.5 million new users, but instead, the service lost subscribers. As a result, the total number of paying users is now 221.64 million. The market had expected a correction after the increase in subscribers due to corona, but it was larger than expected.
Netflix attributes the decline mainly to the difficulties in all regions to recruit new users and the fact that the service is no longer available in Russia. The discontinuation of the service in that country and the gradual decline of Russian paying subscribers resulted in a net loss of 700,000 subscriptions. Without that impact, we would have had 500,000 new subscribers,” the company said in its quarterly results. However, Netflix expects to lose another two million users in the second quarter.
The fact that Netflix is getting more complex is also due to the increasing competition from new(er) players, such as Apple TV+ and Disney+. Those subscriptions are often cheaper than the Netflix formulas, which increased its prices in our country last October. What also saves Netflix revenue is that users are increasingly sharing their accounts with friends and family. There is a good chance the company will take stricter action against this soon. Testing has recently started in three countries with an additional fee for users outside the specified household.
Falling subscribers and weak growth prospects will force Netflix to rely more on secondary services such as video games and derivatives to grow its revenues, said eMarketer analyst Ross Benes.
Netflix posted revenue of $7.9 billion in the first quarter, almost ten percent more than a year earlier, mainly due to the increase in subscribers (+6.7 percent) and the rise in fees. However, at $1.6 billion, net profit is lower than in the first half of last year (1.7 billion).
Not only the share of Netflix suffers from the bad news. The streaming service Roku (-8.3 percent) and Walt Disney Co (Disney+, -5.3 percent) also lost on the stock market, as did media companies Warner Bros Discovery Inc., Paramount Global and Spotify Technology SA.