Netflix’s share price, world’s leading subscription streaming service and production company, is down 25.73% in pre-market after the company released its very first Quarter 2022 report, which disclosed that the firm lost approximately 200,000 subscribers in the quarter when it was projected to 2.5 million subscribers.
Netflix for the very first time recording a decline huge number of subscribers in over 10 years. The company claimed the decline on stiffer competition, the inability to expand in some territories due to technological limitations and account sharing. It also claimed inflation and the war in Ukraine as part of the reasons for the loss of its subscribers.
Letter to its shareholders, the firm stated, “However, our relatively high household penetration – when including the large number of households sharing accounts, combined with competition, is creating revenue growth headwinds.”
Netflix explained that it expects to lose another 2 million subscribers in the second quarter of 2022. It further explained that the loss in subscribers meant that 222 million households are paying for Netflix, but over 100 million more are sharing those accounts, who are not paying for its services.
To help boost its subscriber count, the firm is considering offering cheaper ad-supported plans in the coming years. In the company’s most recent earnings call, co-CEO Reed Hastings revealed that the streaming giant is currently working on the offering and that it will be finalizing details for those plans “over the next year or two.”
Hastings also said he finds ads complex and he’s a huge fan of the simplicity of subscriptions but giving consumers who don’t mind watching ads the option to pay less “makes a lot of sense.”