Netflix Inc (NFLX.O) reported a drop in subscribers for the first time in more than a decade, blaming inflation, the Ukraine conflict, and intense competition, and forecasting even more losses in the future, signaling a sudden turn in fortune for a streaming firm that thrived during the pandemic.
According to the corporation, it lost 200,000 subscribers in the first quarter, falling far short of its target of 2.5 million new subscribers. After the invasion of Ukraine, the suspension of service in Russia had a toll, with 700,000 members losing their jobs.
After the bell on Tuesday, Wall Street pushed Netflix’s stock down 26%, wiping out almost $40 billion in market value. The company has lost nearly half of its value since announcing dismal subscriber growth in January.
Netflix is considering launching a lower-cost version of the service with advertising due to slow subscriber growth, noting the success of comparable services from rivals HBO Max and Disney+.
Netflix CEO Reed Hastings stated, “Those who have followed Netflix know that I’ve been against the complexity of advertising and a huge fan of the simplicity of membership.” “However, as much as I support that, I am a larger supporter of consumer choice.”
Roku (ROKU.O), Walt Disney (DIS.N), and Warner Bros Discovery (WBD.O) were all hit by the downdraft, with Roku (ROKU.O) plunging nearly 6%, Walt Disney (DIS.N) falling 5%, and Warner Bros Discovery (WBD.O) down 3.5 percent.
Hastings told investors that the epidemic had “generated a lot of noise,” making it harder to analyze the company’s subscription business’s ups and downs during the last two years. It now appears that a combination of rivalry and the number of accounts exchanging passwords is to blame, making it more difficult to expand.
In remarks during Netflix’s investor video, Hastings stated of account-sharing, “It wasn’t a high priority to work on when we were growing fast.” “Right now, we’re putting in a lot of effort.”