Netflix’s shares dipped by more than 25 per cent, after it announced that it had suffered its first subscriber loss in more than a decade.
The streaming company’s customer base fell by 2,00,000 subscribers during the January-March period, according to its quarterly earnings report released on Tuesday.
This is the first time that Netflix’s subscriber count has fallen, since the streaming service became available throughout many countries outside of China nearly six years ago.
“We’re not growing revenue as fast as we’d like,” Netflix said in its earnings letter.
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“Covid clouded the picture by significantly increasing our growth in 2020, leading us to believe that most of our slowing growth in 2021 was due to the Covid pull forward,” the streaming company said.
The drop this year stemmed in part from Netflix’s decision to withdraw from Russia to protest the war against Ukraine, resulting in a loss of 70,000 subscribers.
Netflix said that its problems are deep rooted, by projecting a loss of another two million subscribers during the April-June period.
If the stock drop extends into Wednesday’s regular trading session, Netflix shares will lose more than half of their value so far this year, wiping out about $150 billion in shareholder wealth in less than four months.
Netflix is expected to reverse the tide by taking steps like blocking the sharing of accounts and introducing a lower-priced and ad-supported version of its service.
“Account sharing as a percentage of our paying membership hasn’t changed much over the years, but, coupled with the first factor, means it’s harder to grow membership in many markets,” Netflix said in the statement.
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Netflix absorbed its biggest blow since losing 8,00,000 subscribers in 2011, the result of unveiled plans to begin charging separately for its then-nascent streaming service, which had been bundled for free, with its traditional DVD-by-mail service.
The customer backlash to that move elicited an apology from Netflix CEO Reed Hastings for botching the execution of the spin-off.