In a recent report of the company's first quarter earnings, Netflix revealed that they've lost quite a bit of subscribers and missed their original Q1 target.
According to CNET, the media streaming giant lost around 200,000 subscribers during the period. Their subscriber numbers are down to 219 million from 22 million at its peak during the January to March period. This also meant that they didn't make their target of gaining 2.5 million new users during the same time frame.
As per Netflix, password sharing in multiple households is one of the biggest contributors to this loss. Their statement are as follows:
"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."
They then proceeded to reveal that in the US and Canada (their biggest market), there were around 30 million unpaid households who were sharing accounts with paying ones. All over the world, that's around 100 million households sharing accounts with their 222 million paying subscribers.
Fighting Netflix Password Sharing
As a response, the company has been trying to crack down on the practice stronger this year. Many users have been given a warning which states that if someone doesn't live with them, that person would need to create their own account if they want to watch.
But Netflix password sharing is just one of the several reasons stated by the streaming giant. They also cited their decision to pull out of Russia and the "winding down" of all paid subscriptions in the country as another reason. Aside from that, the company has also halted all future projects and acquisitions in Russia, as reported by the BBC.
This decision was perhaps part of Ukraine's efforts to ask 50 global tech companies to "put more pressure" on the Kremlin, as implied in this tweet from Ukrainian government official Mykhailo Fedorov:
More sanctions imposed — faster peace restored in Ukraine! I’ve addressed to @SAP and @Oracle for support! pic.twitter.com/oGoRi1iOBa
— Mykhailo Fedorov (@FedorovMykhailo) March 2, 2022
Read also: Netflix Password Sharing: 'Add Extra Member' Testing on South America, How Much Will it Cost?
More Losses Expected
Losing 200k subscribers is not good for Netflix's bottomline, but maybe it's actually the least of their worries as of the moment.
In a report by USA Today, it was also revealed that the streaming platform "expects" to lose an additional 2 million paying customers due to several reasons. They cited how so many people nowadays are no longer confined to their homes to binge-watch, alluding to the easing of COVID restrictions all over the world.
Aside from that, there's also the possibility that their recent price hikes are causing people to move to competitors. All in all, this contributed to the company's stock price falling by 23% in extended trading. More and more investors are pulling their money out of the company due to the slow subscriber growth, which could mean that Netflix stock could lose over half its value this year if the trend continues.
This article is owned by Tech Times
Written by RJ Pierce
