Netflix is losing subscriptions for the first time in 10 years. They are expecting to lose even more in the spring. Netflix hints at the password sharing crackdown is the main reason for subscriber’s fall.
The streaming giant’s share price initially fell close to 20%. It means that Netflix has lost 200,000 subscribers at a single moment. They hint that the password-sharing crackdown is the main cause of this fall. Wall Street had been expecting the company to add 2.5 million subscribers. Even though Netflix Inc., is still expecting to lose 2 million global subscribers in the current quarter.
Netflix has hinted it will crack down on households sharing passwords as it seeks to sign up new members following a sharp fall in subscribers. The number of households using the streaming service fell by 200,000 in the first three months of the year as it faced stiff competition from rivals.
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Netflix is not the app that will only see its downfall like this. They came up with a surprise move. Netflix executives said they are now open to adding advertising to the service – in return for a lower-priced subscription. However, it can also cause a fall but to tackle their share price, Netflix Executives agreed upon that.
Main Cause of the Downfall
The company blamed different factors for its downfall not only the password-sharing crackdown. They mentioned that along with the password-sharing crackdown, factors like huge size, increased competition, the economy, the war in Ukraine, the slowing the rollout of broadband, and the large number of people who share their Netflix accounts with non-paying households are also the reason of this downfall. It also said the decision to close up shop in Russia cost the company 700,000 new additions.
“Our revenue growth has slowed considerably,” the firm told shareholders after publishing its first-quarter results. “Our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds.”
Looking ahead, the company predicts a further 2 million subscribers will leave in the next quarter. It is worth noting Netflix still has over 220 total subscribers and revenue actually grew last quarter (up 9.8% to $7.8 billion). However, profits fell 6%.