For the first time in more than a decade, Netflix users are declining. The video streaming company says it lost 200,000 members in the first quarter of the year. The decline in consumers has been attributed to rising prices in major markets such as the United States and the United Kingdom following the company’s withdrawal from Russia. But Netflix warns that there may be more damage. The company has indicated that account sharing may be stopped because the company wants new accounts to be created.
The company estimates that 100 million users are breaking the rules by sharing passwords with each other. “When our customers were growing so fast, this issue (account sharing) was not a priority,” said Red Hastings, head of the company. And now we’re working very hard on that.
“Password sharing has been a big issue for Netflix for a long time,” Lucas Shaw, who works for Bloomberg News. “The company seems to be identifying things that will help it grow its customer base,” he said. “They’ve tried to stop password sharing in the past, but they’ve had a hard time.”
In a letter to its shareholders, Netflix said that the number of new subscribers had increased during the epidemic, but that the situation has now changed, with the company warning that it may add another 20 users by July in the next three months. Millions of users will leave.
“Our earnings are clearly lower and our results are lower than expected,” the company said. The last time the company lost customers was in October 2011. However, it still has more than 220 million users worldwide.
The company says it has lost 700,000 customers in Russia due to the Ukraine war shutting down its services. Netflix says another 600,000 subscribers from the United States and Canada have stopped using the service since its price hike. Netflix says the move is yielding the expected results and will benefit the company financially despite the drop in customers.
According to the company, revenue for the first quarter of this year was 8 9.8 billion, compared to 7. 7.8 billion in the same period last year. However, this time it was slower than in the previous quarter, with profits falling 6% to about 6 1.6 billion.
This loss was partially offset by new customers in Japan and India. The company is looking at international markets to grow its business and is looking for ways to prevent about 100 million users from sharing passwords, with about 30 million in the United States and Canada.
The company now intends to generate revenue from ads and those who share passwords with friends and family. “People who use Netflix know that I’ve been against the complexities of advertising and in favor of simple subscriptions,” said Hastings.
But analysts say rising consumer spending is a burden. In the first three months of the year, home users in the UK canceled more than 1.5 million streaming subscriptions, with 38% saying they wanted to save money, according to research by market research firm Counter. This is the highest level ever.
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Netflix is also facing stiff competition, as traditional media companies from Amazon and Apple to Disney are investing in their online streaming services. Although Netflix and other services were most used in the lockdown, consumers are now rethinking their purchasing behavior. He added that people in North America want more services for less dollars.
Shares of the company fell 20% in the New York market after the news. The company has lost 30 billion in the market. Investors’ concerns also affect shares of other entertainment firms, including Disney.