Netflix lost 200,000 clientele in the most recent quarter, a significant loss for the streaming titan which has enjoyed exponential user growth over the previous decade. The company revealed that it fell far short of its own low estimates of 2.5 million new users by the start of 2022.
Except for the Asia Pacific market, where it witnessed a net gain of almost 1 million customers, the streaming giant lost users in nearly every region.
Netflix lost roughly 640,000 subscribers in the United States and Canada in the first quarter, a higher decline than its prior subscriber loss in the region last year, and 300,000 in Europe, the Middle East, and Africa, and 350,000 in Latin America.
The decline is projected to continue into the second quarter when Netflix expects to lose another 2 million customers.
Netflix co-CEO Reed Hastings stated in a pre-recorded interview that the company will look into creating an ad-supported tier in the “next year or two” – a move that Netflix officials had previously opposed.
“Those who have followed Netflix know that I have been a vocal opponent of advertising complexity and a strong supporter of subscription simplicity. But, as much as I enjoy that, I prefer consumer choice, and letting consumers who want a lower price and are tolerant of advertisements to obtain what they want makes a lot of sense,” Hastings added. “Think of us as being fairly open to delivering even lower costs as a consumer choice with advertising”.
.According to CFO Spencer Neumann, the streamer will also draw back some of its content investment over the next two years in order to boost revenue growth. During the pre-recorded interview, Neumann added, “We’re cutting back on some of our spend increases across both content and non-content expenditure and we’re trying to be wise and sensible about it, reining in some of that expenditure increase to match the realities of the business’s revenue growth”.
Due to the company’s poor performance in Q4 and lowered estimates for the first quarter, Wall Street had low expectations for Netflix going into Tuesday’s earnings. Netflix’s move to cease service in Russia, where the streamer claims to have 700,000 customers, was also expected to have an impact on subscriber growth.
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Netflix said in its shareholder letter that it would have added 500,000 customers in the first quarter if the losses in Russia were not taken into account.
However, Netflix attributed its slowing growth in Q1 to a number of issues, including account sharing, the pandemic’s prolonged disruption, and, once again, greater competition from competing streamers.
Netflix revealed in a shareholder letter on Tuesday that more than 100 million of its 222 million paid subscriptions were pooled with viewers outside of paying customers, with 30 million shared accounts in the US and Canada alone.
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