Netflix lost 200,000 subscribers worldwide during the first quarter, compared to the end of 2021, the first in more than a decade that caused shares to fall on Wall Street on Tuesday.
The streaming giant explained that this drop was mainly related to the difficulty of acquiring new subscribers in all regions of the world, but also to the suspension of the service in Russia.
The industry pioneer had inflated the numbers during the Covid-19 pandemic. The market was expecting a correction, but not as strong. Its stock fell 26% in e-commerce after the close of the New York Stock Exchange.
Netflix was expected to gain an additional 2.5 million subscribers, and analysts expected even more, but instead lost some, reducing its total to 221.64 million subscriptions.
“The suspension of our service in Russia and the gradual decrease in the number of Russian paid subscribers meant a net loss of 700,000 subscriptions. Without this impact, we would have had an additional 500,000 subscriptions” compared to the last quarter, said the company. California in its earnings publication.
– Video games –
In total, Netflix earned $ 7.9 billion in revenue from January to March, almost 10% more than a year ago, thanks in part to a one-year increase in subscribers (+ 6.7%) and increase in their prices.
But it generated 1.6 billion in net profit, less than the 1.7 billion in the first quarter of 2021.
The fact that many households share their account and the increase in competition “create obstacles to our growth. The rise of streaming thanks to Covid had masked reality until recently,” the group said.
“The loss of Netflix subscribers is very revealing for a company that has been steadily gaining subscribers for a decade,” said eMarketer analyst Ross Benes.
“With declining subscriptions and weak growth prospects, Netflix will have to rely more on secondary branches, such as video games or derivatives, to try to grow its revenue,” he added.
After years of winning high-speed users and awards at festivals, in late 2019 the company was joined by strong competitors such as Disney + and Apple TV +.
He then tried to diversify his sources of income, especially in the lucrative video game market. In September, Netflix acquired its first video game studio, Night School Studio, a California start-up that created the supernatural thriller Oxenfree.
In November, it released several mobile games for its subscribers, including some inspired by the universe of the sci-fi and horror series “Stranger Things.”
– Stop sharing your account –
More recently, the U.S. group pledged to tighten the screw on the side of the ID sharing, which allows many people not to pay to access the platform.
Netflix announced in early March that it would be testing in South American countries to charge its customers to add additional profiles to their account.
Sharing passwords between households “affects our ability to invest in quality series and movies for our members,” Chengyi Long, Netflix’s director of product innovation, said in a statement.
The company said on Tuesday that it had these measures, and improvements in its overall service, to “accelerate the growth” of its revenue.
“People love movies, TV shows, and games; high-speed Internet and connected TVs continue to advance around the world with more and more connected devices; and while hundreds of millions of households pay for Netflix, more than half of the homes connected by broadband not yet, represent great potential for future growth, “Netflix notes.