Streaming giant Netflix is reeling after reporting it lost some 200,000 subscribers in the first quarter of 2022, missed revenue projections and still hasn’t figured out how to deal with the 100 million viewers the company says are piggybacking for free on paid subscriptions.
Here’s the movie trailer: Netflix suffered its first subscriber loss in more than a decade, causing its shares to plunge 25% Tuesday in extended trading amid concerns that the pioneering streaming service may have already seen its best days, the Associated Press reports.
And the financial losses continued on Wednesday.
CNN Business reports Netflix stock lost an additional 30% in early trading Wednesday, wiping another $45 billion from the company’s value.
The latest subscriber loss was far worse than a forecast by Netflix management for a conservative gain of 2.5 million subscribers. The news deepens troubles that have been mounting for the streaming service since a surge of signups from a captive audience during the pandemic began to slow, according to AP.
Helping drive the overall loss in subscribers was Netflix’s decision to cease operations in Russia, a move that cost the streamer some 700,000 subscribers, according to the Associated Press.
No more freebies: When it comes to paying viewers, Netflix remains the biggest streaming service on the planet and boasts nearly 222 million subscribers. U.S. users pay anywhere from about $10 to $20 per month for access, depending on their plan. The next closest platform is Amazon Prime, where 175 million subscribers streamed movies in 2021, according to Variety.
But as Netflix struggles to remain competitive in a growing streamer marketplace, and copes with diminished interest from viewers who are no longer stuck in their homes due to pandemic conditions, it’s time to put the clamps down on those who are doing their viewing for free, according to company co-founder and CEO Reed Hastings.
“Those are over 100 million households already are choosing to view Netflix,” Hastings said following the release of the earnings report. “We’ve just got to get paid at some degree for them.”
And that represents a marked change from the long-running Netflix practice of turning a blind eye to subscription piggybacking.
Per AP, Netflix said it will expand a trial program it has been running in three Latin American countries — Chile, Costa Rica and Peru. In these locations, subscribers can extend service to another household for a discounted price. In Costa Rica, for instance, Netflix plan prices range from $9 to $15 a month, but subscribers can openly share their service with another household for $3.
Hastings has long been opposed to adding commercials or other promotions to the platform but said during the company’s prerecorded earnings conference call that it “makes a lot of sense” to offer customers a cheaper option.
“Those who have followed Netflix know that I have been against the complexity of advertising and a big fan of the simplicity of subscription,” Hastings said. “But as much as I am a fan of that, I am a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and are advertising-tolerant to get what they want makes a lot of sense.”