The first quarter of 2022 proved to be a loss-making one for Netflix, which lost a large number of subscribers. The company reported a loss of 200,000 users worldwide compared to the fourth quarter of last year and is forecasting even greater losses, estimating that it could lose up to 2 million subscribers in the second quarter.
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“Our revenue growth has slowed significantly,” Netflix acknowledged in letter to shareholders. “Covid clouded the picture by significantly increasing our growth in 2020, leading us to believe that the majority of our growth slowdown in 2021 was due to the pandemic.” Netflix ended the quarter with about 222 million subscribers, so it is still the largest streaming. However, it appears to be facing a number of challenges.
In January, Netflix announced its first monthly subscription increase in two years. According to the company's earnings report, it lost 600,000 customers across the U.S. and Canada and that this was "largely the result of the price change, which is tracking in line with our expectations."
The streaming service also recently announced that it will change its rules for customers who share passwords and logins as it seeks to maximize revenue from the users it already has. Netflix estimates that up to 100 million households use the service through shared passwords.
See also: Netflix: Sharing passwords with an extra charge?
The slowdown in subscriptions is due to something else, of course. Netflix is competing with more rival services than ever before, each doing its best to get more consumers onto platform . The competition is also getting cheaper, with Disney Plus announcing plans to offer a lower-cost, ad-supported tier later this year. So it’s no surprise that Netflix’s growth has been more gradual in recent years. In March, the company suspended its service in Russia after the country invaded Ukraine. Today’s earnings report says Netflix lost about 700,000 subscribers as a result.
See also: Netflix and TikTok withdraw from Russia
So what does the company plan to do? “Our plan is to re-accelerate our viewership and revenue growth by continuing to improve all aspects of Netflix — especially the quality of our programming and recommendations, which our members value most,” Netflix said in its earnings letter. The company noted that “on the product side, we recently launched ‘double thumbs up’ so members can better express what they really love, allowing us to continue to improve personalized recommendations and the overall experience.” Netflix also says international success is critical to its future. “Long-term, much of our growth will come from countries outside the U.S.,” the company said.
As it explores new avenues to attract more customers, Netflix has been expanding deeper into gaming. Just this week, it announced a partnership with Exploding Kittens that will produce both a mobile game and an animated series.
