Netflix has lost 200,000 subscribers in the first quarter of 2022, according to the streaming platform’s latest financial earnings report, in which it also admitted that the company is “not growing as fast as [they] would like.”
“Covid-19 clouded the picture by significantly increasing our growth in 2020, leading us to believe that most of our slowing growth in 2021 was due to the Covid-19 pull forward,” stated Netflix in the letter to its shareholders.
“It’s increasingly clear that the pace of growth into our underlying addressable market (broadband homes) is partly dependent on factors we don’t directly control, like the uptake of connected TVs (since the majority of our viewing is on TVs), the adoption of on-demand entertainment, and data costs,” it noted.
Other factors out of Netflix’s control, the streamer said, included “sluggish economic growth, increasing inflation, geopolitical events such as Russia’s invasion of Ukraine, and some continued disruption from Covid-19.”
Moreover, Netflix’s boycott of Russia alone led to the loss of 700,000 subscribers in March, the company said. Netflix had announced the suspension of its service and the pause of all current and future projects and acquisitions in the country, following Russia’s invasion of Ukraine.
In its letter to shareholders, the streamer also said that increasing competition from traditional entertainment companies has also dwindled Netflix’s growth.
The focus at present, however, is on the menace of password sharing that Netflix has been working on for almost two years, said Chief Product Officer Greg Peters during a video conference call.
In addition to its subscriber base of 222 million households, Netflix has estimated that 100 million additional households, including over 30 million in the US – Canada region, are using the service through the means of shared passwords.
While password sharing did not top the company’s priority list, earlier, it has now become a major concern for the streaming platform. As a result, in March, Netflix had rolled out tests in Costa Rica, Chile, and Peru to find out if users would be willing to pay extra to share their accounts with non-subscribers, or people beyond their households.
In 2021, the platform had started cracking down on the password-sharing trend by prompting users for authorisation via one-time passwords (OTPs).
As of Tuesday, Netflix’s leadership confirmed that while the current account-sharing tests will be extended to other countries, including the US, the actual implementation might take a year, or more.
It is to be noted that Netflix had earlier slashed prices in India in an effort to promote growth in the country. However, Peters said that revised plans have not have any significant impact in India.
Netflix is also considering introducing low-priced ad-supported plans in the next couple of years, along the lines of other platforms like Hulu, Disney Plus, and HBO Max.
The streamer also plans to continue with its content creation, given the hit of recent shows and films like season 2 of Bridgerton, Inventing Anna, and The Adam Project.
The second quarter of 2022 is expected to see a spike in revenue for Netflix as well, with the return of popular shows like Stranger Things, Elite, and Ozark.