Subscribers Down 200,000 – Opinion

Netflix is having a Terrible, Horrible, No Good, Very Bad Day, announcing that it’s lost 200,000 paid subscribers in the first quarter—its first subscriber loss since 2011. The shares of Netflix plunged more than 25% in the hours after trading.

Netflix Loses 200K Subscribers in Total Earnings Miss https://t.co/oi1qZ6XBnZ

— The Hollywood Reporter (@THR) April 19, 2022

The worst part is that the company expects a breathtaking outcome. two million subscriber lossThe second quarter.

On Tuesday, they sent a written letter to shareholders:

As our forecast and results below indicate, revenue growth has been slowing.

…However, our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds.

Interesting thing about this is that analysts and company appeared to have been completely unprepared. CNBC Reports:

Netflix stated previously to shareholders that the company expected 2.5 million new subscribers in its first quarter. Analysts predicted this number to be close to 2.7million.

Oops. Perhaps they should have been reading RedState’s Brandon Morse, who saw this coming last June and wrote about the reasons why, including the winding down of the pandemic (which wound back up again that fall), the rise of competing streamers, and the company’s knack for getting into controversies. He wrote:

What isn’t going to help is that Netflix has also made it clear that it doesn’t really care how angry people get about the wokeness of a show. They consider backlash to have a positive effect on people’s opinions because it makes them talk about the show.

The list of squabbles Netflix has gotten involved in is long, but it includes the Dave Chappelle comedy special brouhaha—from which Netflix notably didn’t shrink—the complaints that Cuties was sexualizing young girls, the charge that they were turning “up the wokeness to 11” in shows like “Vikings: Vallhalla,” the Kevin Spacey saga, and more.

Many people will now naturally ask, “What does this mean for me?” Well, if you’re a Netflix subscriber who shares their subscription, you may soon be in for a rude awakening. The company estimates that almost 100 million viewers regularly use borrowed passwords, and they’re planning to crack down on the practice. This is their shareholder letter

Another focus is how best to monetize sharing – the 100M+ households using another household’s account… So early last year we started testing different approaches to monetize sharing and, in March, introduced two new paid sharing features, where current members have the choice to pay for additional households… So while we won’t be able to monetize all of it right now, we believe it’s a large short- to mid-term opportunity.

Translation: We’re putting our foot down, people!

I’ll be honest—Netflix got me through the pandemic, especially the first year. People are now going to restaurants instead of watching the TV, and there is a lot of competition for their attention with companies like Paramount+ and Disney+. Netflix will survive. But they may be in for some tough times.