Netflix’s battle to increase its subscriber base reached a stalemate in the first quarter of 2022. The company recorded a global subscriber loss of 200,000 members in Q4 and is predicting significantly larger losses in the coming quarters. Netflix projects a second-quarter loss of up to 2 million members.
Netflix stated in a letter to shareholders that “revenue growth has slowed significantly.” “Covid obfuscated the picture by significantly raising our growth in 2020, causing us to conclude that the majority of our 2021 growth slowdown was due to the Covid pull forward.” Netflix completed the quarter with over 222 million users, maintaining its position as the world’s largest streaming service — but it is facing a plethora of obstacles.
Netflix announced its first monthly subscription price rise in two years in January. Today’s earnings report includes the following: Netflix says it lost 600,000 members in the United States and Canada, primarily as a result of the price increase, which is tracking in line with forecasts.
The streaming behemoth recently signalled that it will tighten the screws on consumers who share passwords and login information in an effort to maximise revenue from existing users. And this is no little matter: Netflix currently believes that the service is used by up to 100 million households via shared passwords. “It’s more difficult to develop membership in many markets,” Netflix stated as a result of the situation.
The decline in signups reflects a more competitive streaming landscape: Netflix now competes with more competitor services than ever before, all seeking for customer attention and eyeballs. Additionally, the competition is becoming more affordable, with Disney Plus announcing plans to introduce a lower-cost, ad-supported tier later this year. As a result, it’s unsurprising that Netflix’s growth has slowed in recent years. The corporation ceased operations in Russia in March following the country’s invasion of Ukraine. According to today’s earnings announcement, Netflix lost approximately 700,000 customers as a result.
So what happens now? “Our goal is to reaccelerate our viewing and revenue growth by continuously improving all elements of Netflix — most notably the quality of our programming and recommendations, which our members appreciate the most,” Netflix stated in its earnings letter. “We’re doubling down on narrative creation and creative quality on the content side.” According to the firm, “on the product side, we just released ‘double thumbs up’ to allow members to indicate what they actually love rather than simply like – allowing us to continue improving our targeted suggestions and overall experience.” Additionally, Netflix asserts that foreign success is vital to the company’s future. “Over the long term, a significant portion of our growth will come from outside the United States,” the corporation stated.
