For the first time since October 2011, Netflix has seen a drop in its overall subscriber count. The streaming service lost 200,000 subscribers during the first three months of 2022.
Shares in the company plummeted by 26% in pre-market trading Wednesday, which took $40 billion off its value. Netflix did see 10% revenue growth during the quarter, but was otherwise pessimistic about its Q1 showing, stating that revenue growth had “slowed considerably”.
The firm attributed the slump to a number of factors, including the tendency for many households to share passwords – a practice that it hinted it would crack down on.
As the company said to shareholders: “Our relatively high household penetration – when including the high number of households sharing accounts – combined with competition, is creating revenue growth headwinds.”
Netflix has also recently ceased to be active in Russia, and increased prices in some countries, which are further potential factors in its subscriber drop. In addition, the company cited some factors that were out of its control, such as data costs and the uptake of connected TVs.
It all paints a bleak picture for the streaming provider, which also warned that it could lose an additional two million subscribers during the next quarter.
Alongside focusing on the issue of household sharing, Netflix CEO Reed Hastings indicated that the company was considering introducing ad-supported plans to give consumers cheaper subscription options, in the wake of the success of rivals – such as HBO and Disney – that have followed a similar model.