Netflix is ​​losing subscribers, which leads to a 25% drop in inventory

distance Shares fell earlier this year Due to concerns about subscriber growth, the broadcast leader said that Lost subscribers when it announced first-quarter earnings on Tuesday.

Netflix (NFLX) It now has 221.6 million subscribers globally. The company reported on Tuesday that it lost 200,000 subscribers in the first quarter of 2022. The service was Expected to add 2.5 million subscribersIt expects to lose another 2 million subscribers in the second quarter of 2022, it said.

It can’t be overstated how badly this report is for the King of Live Broadcasting now. The company’s stock is down more than 40% year-to-date, and there’s been a lot of anxiety from investors regarding its earnings growth — concerns that materialized on Tuesday with Netflix losing not only its bottom line but losing thousands of subscriptions to boot — something that hasn’t Happening in the company for more than a decade.

What happened?

In its letter to investors, the company said that since launching live broadcasting in 2007, the company has “operated on the firm belief that online, on-demand entertainment will replace linear television,” but added that, in the near term, “we are not making profits as quickly as we would like.” “.

Netflix said the pandemic “blurs the picture by significantly increasing our growth in 2020, leading us to believe that most of our slowing growth in 2021 was due to Covid’s rush forward.”

“In addition to our 222 million paid families, we estimate that Netflix is ​​shared with more than 100 million additional families, including more than 30 million in [United States/Canada] area,” the company said.

Netflix said the withdrawal from Russia cost the company 700,000 subscribers.

The company’s bad report is likely to disrupt the streaming market since many other companies have changed their business strategies to compete with Netflix.

What now?

Netflix told investors Tuesday that it plans to turn the tide by doing what it’s always done: improve the service.

“Our plan is to reaccelerate viewing and revenue growth by continuing to improve all aspects of Netflix — particularly the quality of our programming and recommendations, which our members value most,” the company said.

The company added that it was “doubling up on story development and creative excellence” and that it launched a “Double Like” tool that will allow members to “better express what they really like versus what they simply like.”

Netflix also said it will focus more on “best ways to monetize sharing” in terms of passwords.

“Sharing has likely helped fuel our growth by getting more people to come to and enjoy Netflix. We’ve always tried to make sharing easier within a member’s home, with features like multi-profiles and streaming,” the company said. “While these were very common, they caused confusion about when and how Netflix could be shared with other families.”

“While we won’t be able to monetize all of that right now, we think it’s a huge short-to-medium-term opportunity,” they said.

Advertising is another place that can help increase revenue and attract more subscribers to the service.

Netflix CEO Reed Hastings has long been allergic to the idea of ​​commercials on the platform, but in a call on Tuesday with analysts, he mentioned that might be possible in the future.

“Those who’ve followed Netflix know I’ve been against the complexity of ads and love the simplicity of subscription. But as much as I’m into that, I’m a huge fan of consumer choice,” Hastings said on a post-earnings call. “And letting consumers who want a lower price and are tolerant of advertising to get what they want makes a lot of sense.”

He added that the company is studying this now and trying to find it “within the next year or two.”

“Think of us being completely open to offering lower rates with ads,” Hastings said.

Despite a massive growth slowdown that has put its strategy into question, Netflix has remained defiant.

“This focus on continuous improvement has served us well for the past 25 years,” Netflix said. “That’s why we’re now the largest subscription streaming service in the world on all the key metrics: paid subscriptions, engagement, revenue, and profits.”