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Netflix Loses Subscribers for the First Time in 10 Years, Blames Account Sharing

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Netflix lost subscribers for the first time in more than a decade in Q1 2022, according to subscriber numbers the company said during today's earnings results. Netflix is down more than 200,000 subscribers, and the losses are set to continue.

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Netflix was expecting to add 2.5 million subscribers in the first quarter of 2022, but did not hit that target. The suspension of its business in Russia cost it 700,000 subscribers, and without that loss, Netflix would have added 500,000 paid global users, which is still well below its projections.

In the United States and Canada, Netflix lost 600,000 customers, due to recent pricing changes. Netflix said this subscriber loss was anticipated and in line with expectations.

In a letter to shareholders [PDF], Netflix said that revenue growth has "slowed considerably," with the company faulting "a large number of households sharing accounts" and "competition" as reasons for the drop off. Netflix estimates that its 222 million paying households are sharing with an additional 100 million households that are not being monetized.

Going forward, Netflix said that it plans to implement "more effective monetization of multi-household sharing," which suggests that Netflix will soon enact measures to prevent account sharing. Netflix in March began testing an extra payment for those who share their Netflix accounts with people outside their households.

In Netflix's current test markets of Chile, Costa Rica, and Peru, customers can pay an extra fee to share their accounts with two people outside of their household. When the test was launched, Netflix said that it was working to "understand the utility of these two features" before making changes in other countries.

Netflix has always included wording in its terms and services that prevents account usage across multiple households, but until now, the service has ignored password sharing. Netflix also recently enacted new price hikes, and a 4K streaming plan is priced at $20 per month.

It's worth noting that Netflix is the only streaming service that charges by streaming quality. In the U.S., Netflix charges $9.99 for the Basic no-HD plan that allows for streaming on a single device, $15.49 for a Standard HD plan that allows for two people to watch at the same time, and $19.99 for a Premium plan with Ultra HD streaming and support for four simultaneous viewers.

In the second quarter of 2022, Netflix is anticipating losing two million paid subscribers. To mitigate the continued losses, Netflix co-CEO Reed Hastings said that in addition to addressing password sharing, the company is considering a more affordable, ad-supported plan within a year or two.

Article Link: Netflix Loses Subscribers for the First Time in 10 Years, Blames Account Sharing
 
Article Link
https://www.macrumors.com/2022/04/19/netflix-loses-subscribers-q1-2022/
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Right... account sharing.

As if that hasn't been happening for years and years and years now, over the course of which they've managed to grow subscribers every quarter. But when the saturated and more competitive OTT market slows their subscriber growth numbers, let's blame account sharing.
 
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Account sharing has been a problem since Netflix started, it’s not suddenly causing them issues; Netflix doesn’t want to admit they have more competition and they’ve continued to raise prices despite the value of their service going down in a competitive market. If a higher percentage of users are account sharing, it’s almost certainly a by-product of the unjustifiable price increases despite a lack of quality content. People aren’t willing to pay an arm and a leg to a company that uses 90% of subscriber fees to produce crap nobody wants to watch.
 
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This was only a matter of time. Streaming customers have an insatiable appetite for content and Netflix has tried to position themselves as the only service you need by shoveling as much of that content as they could into their service, but that resulted in a race to the middle/bottom in terms of quality.

Making great tv and movies isn’t something you can “optimize”, which they tried to do with a mix of viewership data and corner cutting on production costs. At the same time, the giants of competition have awoken and are learning from Netflix’s mistakes.

They might still be able to turn things around but it’ll be a slow climb back up. Anyone thinking they’re buying Netflix stock on sale right now is in for a rude surprise when they find out that’s the actual sticker price.
 
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What's missing from this version of the story: revenue improved vs. same quarter 1 year ago but fell short of expectations.

Keep in mind too that they suspended operations in Russia which resulted in a loss of 700K paid net additions. Had there been no war-driven action there, they would have added about 500K subscribers in this quarter.

Much like Apple releasing better revenue numbers than expected but then the stock taking a hit, it's expectations that is mostly driving this. The bad news on that front is Netflix expecting to lose about 2M more subscribers this quarter. However, for the next quarter, they are expecting to again (revenue) beat the same quarter from a year ago even with fewer subscribers. How do you do that? One way is the added revenue from price hikes makes a modestly smaller number of subscribers yield more revenue.

So while we will beat them down in this thread, the net result is they are actually making MORE money from modestly fewer subscribers AND taking the stance of actually cutting off certain revenue from Russia. They similarly expect to make MORE money next quarter than year ago too but their projection is not as high as Wall Street would like (sound familiar?) so the stock is taking a pounding today.

Basically "Netflix is doomed! Netflix is doomed!" with about $8 Billion/quarter, 222 MILLION subscribers and their belief that 100 MILLION households are "sharing" access from someone else without paying for it. If that number is real and they cut off up to 100 MILLION people and/or do what they are doing with an extra fee to share with another household in some test countries, what is likely to happen to paying subscriber counts? They add a bunch of new revenue from the people who are not paying for it now... certainly not 100M but it won't take many having to actually pay for the service to completely cover this modest loss of subscribers PLUS the expected 2M. This whole thing is about a fraction of 1% of the whole business.

No particular sympathy for Netflix or anything- just adding some information that might paint a different picture than the simplistic: price hike = devastation... quality of content = devastation.
 
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Yeah, sure Netflix, like password sharing is new. Blame it on the competition and your pricing tiers, which provides higher quality options. Disney+, Prime Video, Hulu, HBO Max, Apple TV+, etc while neither of them have the amount of content that Netflix has, they're pushing higher quality content. Netflix just picks up every show, gives them a first season, cancels 70% of them and so on. I think people are getting tired of that.
 
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GeoStructural said:
Content is still better than anything on Apple TV+.

With that said, yes, indiscriminate price increases are more to blame.
Click to expand...
To be subscribed to both, I wouldn't say that Netflix has necessarily better content than Apple TV+, both have great (and not so great) shows and movies. But Netflix has way more content, so for many, it's probably more worth it to be subscribed to Netflix than TV+, I can understand that. Apple TV+ is still a small fish in the streaming services world
 
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