Netflix Subscribers Fall for First Time in a Decade

Streaming giant Netflix lost subscribers in the first three months of this year after years of explosive growth, sending the company’s shares plummeting.

Netflix announced it lost 200,000 subscribers in the first quarter. The drop represents a huge miss for Netflix, which originally estimated it would add 2.5 million subscribers in the same period.

It warned investors it expected another two million subscribers to leave in the three months to July.

In a letter to shareholders, Netflix said a surge in sign-ups it saw during the pandemic had “obscured the picture.”

“Our revenue growth has slowed considerably as our results and forecast…show,” the company said as it released its quarterly results.

“Our relatively high household penetration—when including the large number of households sharing accounts—combined with competition, is creating revenue growth headwinds,” it revealed.

Pulling out of Russia, a step Netflix took following the war in Ukraine, cost it 700,000 subscribers, the streaming company said.

Another 600,000 people stopped its service in the US and Canada after the price increase, Netflix said.

Netflix blames drop in subscribers sharing the same account

The firm’s revenue in the first three months of the year was up 9.8% compared with the same period last year to more than $7.8bn.

That marked a slowdown from earlier quarters, while profits fell more than 6% to roughly $1.6bn.

Netflix placed some of the blame for the drop in subscribers on family members sharing the same account, something that the company has recently started to crack down on.

Many people have access to Netflix, the world’s biggest streaming service, through the accounts of friends and family.

Although against Netflix’s terms and conditions, it’s common for people to share their log-in credentials with people close to them so that they can use the service, as well, free of additional charges. Some people even have access to and sneakily use the accounts of ex-partners.

It also pointed to the brewing conflict between giants such as Amazon, Disney, and Apple— dubbed the “streaming wars”—as another reason for a hit to its subscriber numbers.

There have been growing concerns for some time that after more than a decade of meteoric growth, Netflix would eventually start to see a drop off in subscribers as its competitors strengthened their offering.

Last year, streaming services such as Netflix spent $50bn on new content in an effort to win or retain subscribers, according to researcher Ampere Analysis.