Synopsis: Reportedly, it is for the first time in more than a decade that the company has recorded this much loss in terms of subscribers. The number of subscribers leaving the OTT streaming platform is much higher than the forecast.Subscription-based OTT (Over The Top) streaming platform, Netflix has recorded a 25 percent drop in its shares in the first quarter of the year after the company announced that the subscriber count on the platform has shrunken by 200,000.
Reportedly, it is for the first time in more than a decade that the company has recorded this much loss in terms of subscribers. The number of subscribers leaving the OTT streaming platform is much higher than the forecast. Suspension of services in Russia over the country’s invasion of Ukraine has resulted in the company losing 700,000 members.
Netflix has recorded a net income of $1.6 billion in the last quarter which is less than the same period last year at $1.7 billion. Netflix made the revelation in its earnings letter. The OTT platform stated,
We’re not growing revenue as fast as we’d like. Covid-19 clouded the picture by significantly increasing our growth in 2020, leading us to believe that most of our slowing growth in 2021 was due to the Covid-19 pull forward. Now, we believe there are four main inter-related factors at work.
In the letter, Netflix has stated that there might be several factors under which it cited that delay in its addressable market which are homes are taking time to get access to (affordable) broadband internet service and smart televisions that will be required for streaming the platform on Television.
The company also mentions that it has over 222 million households that are paying for the services of Netflix while it estimates that the number of subscriptions being shared outside households is over 100 million. The 100 million shared subscription includes 30 million from the UCAN region.
Mentioning the third reason for the declining number of subscribers, the company in the letter states,
Competition for viewing with linear TV as well as YouTube, Amazon, and Hulu has been robust for the last 15 years.
Netflix said, “Account sharing as a percentage of our paying membership hasn’t changed much over the years, but, coupled with the first factor, means it’s harder to grow membership in many markets – an issue that was obscured by our COVID growth.”
Interestingly, the company recently introduced a pilot project of testing in order to make money from other people sharing subscriptions outside their households. It had announced that it will carry out the test in Chile, Costa Rica, and Peru. The company had been dealing with the issue of multiple people using a single subscription profile for quite a while. Seeing the current scenario, as per reports, the company may offer cheaper plans with ad support.