Reed Hastings, co-CEO of Netflix, is attending the Milken Institute Global Conference on October 18, 2021 in Beverly Hills, CA.
Patrick T. Fallon | AFP | Getty Images
Shares of Netflix rose more than 24% on Tuesday after the company reported a loss of 200,000 subscribers in the first quarter. This is the first time the streamer has reported a decline in paid users in more than a decade.
The company also said it expects the decline to continue, forecasting a global loss of paid subscribers of 2 million in the second quarter.
“Our revenue growth has slowed significantly,” the company wrote in a letter to shareholders on Tuesday. “Sturdy overcoming wins over linear, as we predicted, and Netflix titles are very popular around the world. However, the relatively high penetration of families – if you include a large number of households sharing accounts – combined with competition, creates a headwind. income “.
Netflix previously told shareholders it expects to increase 2.5 million net subscribers in the first quarter. Analysts had predicted that figure would approach 2.7 million. Over the same period a year ago, Netflix added 3.98 million paid users.
Here are the main figures from the report for the first quarter:
- EPS: $ 3.53 vs. $ 2.89, according to a survey by Refinitiv analysts.
- Income: $ 7.87 billion against $ 7.93 billion, according to a survey by Refinitiv analysts.
- Global paid net subscribers: StreetAccount estimates an expected loss of 200,000 compared to 2.73 million applications.
The company said the suspension of its service in Russia and the termination of all Russian paid members resulted in the loss of 700,000 subscribers. Excluding that impact, the company said it would have received 500,000 net supplements in the last quarter.
Netflix also cites rising competition from traditional entertainment companies that have launched streaming services, as well as exchanging passwords for a recent kiosk in paid subscriptions.
The company estimates that in addition to the 222 million paying families, the service is used with more than 100 million additional households through account sharing.
Netflix said the pandemic had blurred the company’s “picture” and led it to believe that the slowdown in 2021 was due to the return of subscribers to more normal activities outside the home.
In an effort to continue to gain market share, Netflix has increased spending on content, especially originals. To pay, inflated prices for their services. The company said Tuesday that these price changes are boosting revenue, but was partly responsible for the loss of 600,000 subscribers in the U.S. and Canada in the last quarter.
While the company is exploring other growth options, such as adding video games, analysts and investors are wondering what else Netflix can do to increase revenue.
Correction: Netflix reported revenue of $ 7.87 billion for the first quarter of 2022.
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