Netflix loses subscribers and they cause losses

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Netflix said it will expand a trial model introduced last month in Chile, Peru and Costa Rica that allows subscribers to add up to two people living away from home to their accounts for an additional fee.

This is after service company Netflix suffered its first subscriber loss in more than a decade, sending its shares tumbling 25% in the afternoon trade on fears the streaming pioneer may be past its best. days.

The company lost 200,000 subscribers in the January-March period, according to its quarterly earnings report released Tuesday.

It’s the first time Netflix subscribers have dropped since the streaming service became available in most parts of the world six years ago.

This year’s drop stemmed in part from Netflix’s decision to withdraw from Russia to protest the war in Ukraine, resulting in a loss of 700,000 subscribers.

Netflix acknowledged that its problems run deep and projected a loss of another 2 million subscribers during the April-June period.

If the stock slump extends into regular trading hours, Netflix shares would have lost more than half their value so far this year, erasing nearly $150 billion of shareholder wealth in less than four months.

Netflix hopes to reverse this trend by taking steps it has previously resisted, including blocking improperly shared accounts and introducing a cheaper but ad-supported version of its service.

Aptus Capital Advisors analyst David Wagner said it’s clear that Netflix now faces a big challenge. “They are on a battlefield,” Wagner wrote in a note Tuesday.

Netflix suffered its biggest hit since losing 800,000 subscribers in 2011 as a result of the revelation of plans to start charging separately for its then-nascent streaming service, which was previously included free with its original DVD-by-mail service.

Customer criticism of that move led to an apology from Netflix CEO Reed Hastings.

The latest loss of customers was much worse than Netflix managers expected in the face of a conservative increase of 2.5 million subscribers.

The news underscores the problems that have accumulated for the streaming service after undergoing a major surge in subscribers, with an audience captivated by the pandemic, which began to slow down.

It’s the fourth time in the last five quarters that Netflix’s subscriber growth has fallen short of the previous year’s earnings, a problem that has intensified with increased competition from deep-pocketed rivals like Apple and Walt Disney.

The pullback comes on the heels of the company adding 18.2 million subscribers in 2021, its weakest annual growth since 2016.

The figure contrasted with a surge of 36 million subscribers during 2020 when people were cornered at home and hungry for entertainment, which Netflix was able to provide quickly and easily with its plethora of programming.

Netflix has previously signaled that it will resume its momentum, but on Tuesday it addressed the issues that have plagued it.

“COVID created a lot of noise on how to read the situation,” Hastings said in a video conference reviewing the latest numbers.

Among other announcements, Hastings confirmed that Netflix will start cracking down on those who share user passwords, which has allowed multiple households to access the service from a single account, with changes likely to begin within the next year.

The Los Gatos, California-based company estimated that some 100 million households worldwide watch its service for free using a friend or family member’s account, including 30 million in the United States and Canada.

“That’s 100 million households that are already choosing to watch Netflix,” Hastings said. “They love the service.

We just have to get paid at some point.”

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