The streaming platform has reported a drop in its subscriber base.
(Photo: Reuters)
san francisco Streaming service Netflix has reported a drop in subscribers for the first time in a decade. The customer base had shrunk by 200,000 subscribers in the first quarter, the company announced after the market closed on Tuesday evening in the USA.
Since mid-November, Netflix has lost around half of its rating on the stock exchange. Netflix had predicted 2.5 million new customers. And there is no improvement in sight. The outlook for the current quarter was also bleak, with an expected drop of two million subscribers.
During the development, the US group referred to a large number of households who shared their subscription and the competition. Netflix shares fell more than 25 percent in after-hours trading. Other streaming services also gave way in their wake, such as Disney + with a minus of three percent.
One reason for the decline in the number of customers is the farewell to the Russian market, suspected Raj Shah from the consulting firm Publicis Sapient: “In March, Netflix withdrew from Russia and lost a million subscribers overnight,” he said. Another reason: “The price increase in the USA and Canada in January scared off new customers. Subscribers in the UK and Ireland are now also having to dig deeper into their pockets.”
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In response to the churn of customers, Netflix should not deviate from price increases, but rather expand them, Shah suspected: “Other European countries like Germany are likely to follow soon.”
Netflix currently has 221.6 million subscribers. The company last reported a decline in October 2011. Revenue for the first quarter grew 10 percent to $7.9 billion, not quite as strong as forecast. Earnings per share were $3.53.
Netflix had already surprised investors with a gloomy outlook after the fourth quarter of the past financial year. Since then, the stock is down about a third in regular trading through Tuesday and more than half since November’s peak of about $700.
Even before the new business figures were published, analysts were assuming a difficult year for Netflix. Competitors like Disney+ are expanding their offerings. In addition, the streaming provider competes with video websites such as YouTube and TikTok and other entertainment offers. According to a study by Deloitte on digital media trends published in March, consumers between the ages of 14 and 25 – “Generation Z” – spend more time playing computer games than watching films, TV series or even listening to music.
Analyst Shah suspected another reason behind Netflix’s problems: “The figures for the first quarter show how quickly the pandemic surge will disappear when customers go out again.” Due to rising inflation, more customers are likely to cancel their subscriptions, to reduce their expenses, he surmised.
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