In the last quarter of 2022, Netflix lost about 200,000 subscribers worldwide. It is the first time that the company presents this kind of negative user figures. But are these numbers really that bad? To turn the tide, Netflix tries to play different cards.
This past quarter, Netflix had a lower subscriber base for the first time in a long time than the quarter before. About 200,000 less than the last quarter of 2021. The company expects to lose more subscribers in this second quarter, to two million.
While those numbers sound disturbing, there are many contributing factors. So it seems to be in place after the Corona growth spurt of the past two years. After all, Just Eat, the parent company of Thuisbezorgd, also simultaneously showed quarterly figures in which the company fewer meal orders got to process.
The Russian invasion of Ukraine affects Netflix’s numbers. After the start of the war, Netflix announced that it would no longer be available in Russia, causing the company to lose 700,000 subscribers in one fell swoop. This means that if these Russian figures are not included, Netflix still showed a global growth of 500,000 subscribers last quarter.
After the pandemic, Netflix, just like Thuisbezorgd, must stop.
More money and services
The market is also changing. More and more streaming services are popping up. In the Netherlands, for example, ViaPlay and HBO+ were recently launched. The range of streaming services is large and compared to other services such as Disney+, Amazon Prime Video and Videoland, Netflix is by far the most expensive streaming service. In recent years, Netflix has implemented several price increases that only made the difference in price even greater.
From such a perspective, Netflix’s numbers are quite impressive. The declining number of subscribers can be attributed to the war. Moreover, a contraction of 200,000 subscribers out of a total number of 222 million is marginal. The company also shows decent numbers, with estimated sales of 7.87 billion and profit of 1.6 billion.
Scholarship determines
Still, these numbers are extremely worrisome for Netflix. Why? The company is publicly traded and shareholders want to see growth at any cost. This is also reflected in the stock market figures. Shares of Netflix plunged 26% after the announcement of the quarterly figures.
To get the numbers back up, Netflix has several plans. First of all, the company is trying to tap into a new domain: mobile gaming. A market where an insane amount of money is involved, especially thanks to in-app purchases of free games. After the announcement of the game and animated series Exploding Kittens, Netflix is already taking the first step in May this year.
Netflix is also toying with the idea of cheaper subscriptions with ads. For example, Spotify also has the ability to listen with ads for non-paying users.
bad blood
However, there are also worrisome plans. For example, Netflix says it really intends to tackle account sharing. For example, the company plans to charge extra money for every user who does not live at the same address. A significant change of course that many subscribers may not appreciate. Netflix always allowed this, which helped the company’s image. Such a change of direction could lead to more revenue in the short term, but only increase the challenge of keeping shareholders happy in the long term.
Netflix estimates that 100 million households worldwide share accounts and that the percentage of shared accounts remains about the same. In the shareholder note, Netflix states: “Account sharing has likely contributed to our growth by allowing more people to use and enjoy Netflix. We’ve always tried to make sharing within a member’s household easy, with features like profiles and multiple streams.” With this, Netflix indicates that taxing account sharing can be at the expense of Netflix’s growth.
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