December 3, 2022

Netflix loses subscribers, reduces shares by 25%

Then The shares fell earlier this year Due to concerns about the growth of its subscribers, the head of streaming said it Lost Subscribers reported first quarter earnings on Tuesday.
Netflix (NFLX) It now has 221.6 million subscribers worldwide. It lost 200,000 subscribers in the first quarter of 2022, the company said Tuesday. The service is expected to add 2.5 million subscribers and is expected to lose another 2 million subscribers in the second quarter of 2022.

The report sent 25% of the stock after hourly trading.

Netflix’s fourth-quarter profit was $ 1.5 billion, up from $ 1.7 billion in the previous quarter. Revenue rose 9.8% to $ 7.8 billion.

Now I can not exaggerate how bad this statement is to the streaming king. Shares of the company have fallen more than 40% to date, and there has been a lot of concern from investors about its growth – concerns that on Tuesday Netflix did not see the low bar of its own expectations, but lost. Millions of subscriptions to get started.

What happened?

In a letter to investors, the company said that since its introduction of streaming in 2007, the company has been “operating under the firm belief that it will replace the entertainment linear TV provided by the Internet with the demand”, but added. “We are not raising revenue as fast as we would like.”

The epidemic “clouded the picture by significantly boosting our growth in 2020, leading us to believe that much of our slow growth in 2021 was caused by the cov pulling forward,” Netflix said.

But there are many different factors behind its subscriber stagnation, including the competition and widespread password sharing of traditional media companies such as Disney, which has hit the streaming market in recent years.

“In addition to our 222 million paying families, we estimate that Netflix will be shared with more than 100 million households, including more than 30 million households. [United States/Canada] Region, ”the company said.

The agency blamed “macro factors” that now affect many companies, including sluggish economic growth, rising inflation, geopolitical events such as Russia’s invasion of Ukraine and some persistent disruptions from the COVID.

Netflix says leaving Russia will cost the company 700,000 subscribers.

As many companies have changed their business strategies to compete with Netflix, the company’s poor reporting may shake up the streaming market.

For example, Disney – one of Netflix’s biggest competitors – was down approximately 5% on Tuesday evening.

What now?

Netflix told investors on Tuesday that it always plans to turn the tide by doing: improving service.

“Our plan is to re-accelerate our vision and revenue growth by improving all aspects of Netflix – especially the quality of our programming and recommendations, which our members highly value,” the company said.

The company added that this “doubles the story development and creativity highlight” and the introduction of the “Double Thumbs Up” tool, which will allow members to “better express what they really want and simply want”.

Netflix also said it was focusing more on “how to best monetize sharing” in terms of passwords.

“Sharing has stimulated our growth through the use and enjoyment of Netflix. And with features like profiles and multiple streams, we have always tried to make sharing easier within the member’s family,” the company said. “Although these are very popular, they have created confusion about when and how to share Netflix with other families.”

The company said last month that it has been working on ways to “make it easier and safer for members to share outside their home and pay a little more at the same time”.

“Although not everything can be monetized now, we believe this is a great short-term interim opportunity,” they said.

Despite the dramatic growth slowdown that calls into question its strategy, Netflix remained negative.

“This focus on continuous improvement has served us well over the last 25 years,” Netflix said. “That’s why we are now the world’s largest subscription streaming service by all major metrics: paid membership, engagement, revenue and profit.”