Netflix loses 200,000 subscribers in first quarter; blames competition, password sharing and Russia’s invasion of Ukraine

Netflix announced on Tuesday that it lost 200,000 paid customers in the first quarter, the first drop in over a decade, and warned of more difficulty coming. Netflix expects a 2 million paying subscriber drop in the second quarter globally. October 2011 was the last time Netflix lost subscribers.

Following the revelation, the company’s stock dropped more than 20% in after-hours trading in New York, wiping more than $30 billion off its market value. Other video streaming-related stocks were also hit hard by the downturn of Netflix’s stocks, with Roku plunging nearly 6%, Walt Disney falling 5%, and Warner Bros Discovery losing 3.5 %.

Netflix co-CEO Reed Hastings said Tuesday that after years of opposition to adverts on its streaming service, the company is now ‘open’ to offering lower-priced tiers with ads. “Those who have followed Netflix know that I’ve been against the complexity of advertising, and a big fan of the simplicity of subscription. But, as much as I’m a fan of that, I’m a bigger fan of consumer choice.”

Netflix is also up against stiff competition, with companies like Amazon and Apple, as well as conventional media corporations like Disney, investing heavily in their online streaming services.

According to Netflix, access is shared with more than 100 million additional households through account sharing in addition to its 222 million paying households. It forewarned that a global crackdown might be on the way. Additionally, the suspension of service in Russia, as well as the winding down of all Russian paid memberships, resulted in a loss of 700,000 subscribers.

There are approximately 222 million customers to the streaming platform all around the world. During the pandemic, it saw explosive subscriptions. But as Covid-19 quarantines have been lifted, that growth has slowed – and now gone negative.

Over the years, Netflix has developed a consumer-friendly brand, and permitting password sharing has aided that image. It has long overlooked password sharing because it has grown without cracking down on it, but the business just disclosed that it lost customers for the first time in more than a decade. Now, Netflix has hinted that it will start charging accounts that share passwords ‘outside of home’.

Netflix has yet to lay out a precise plan, but it has stated that global changes could arrive as early as 2023.