This year has been nothing but bad news for Netflix. Despite Wall Street analysts predicting growth of about 2.5 million subscribers in 2022, the streaming giant actually reported a loss of 200,000 subscribers in Q1. Following the slow start was a series of poorly received announcements by the company, which brings us to where we are now; Netflix losing $54 billion in stock value (over a third of its original value), making it the worst performer at the stock market this year.
The internet, true to form, has very little sympathy for the streaming giant, which recently announced its plans to increase subscription prices, to create more restrictions around password sharing, and to offer a cheaper subscription plan that included ads. Naturally, all three of these decisions were met with hefty backlash, and have subsequently been attributed to the company’s loss by many users.
An article from The Guardian claims that Netflix is happy with the decision to raise prices and that it was a “revenue positive” choice.
Speaking of revenue, it’s important to note that the $54 billion loss is the company’s market value and not its revenue; Q1 of 2022 actually saw the company haul in quarterly revenue of over $7.75 billion. But, it should also be noted that the loss of subscribers and subsequent predictions of even more losses down the line stirred up concern for investors, which eventually turned into this $50 billion market value drop.
According to an article from The New York Times, Netflix has cited password sharing and stiffer competition from rivals as a reason for the subscriber loss, both of which also played into the projected losses later this year.
They also noted that the Russian invasion of Ukraine, which resulted in the company withdrawing approximately 700,000 accounts, played a factor in the loss since the company would have otherwise reported a 500,000 subscriber growth, despite still being well below the original 2.5 million that was projected.
It’s hard to say at the moment whether Netflix is jumping the gun on subscriber retention, but it seems that its damage control efforts have backfired with the public thus far. If the company’s claim about competition is to be believed, then perhaps the goal lies with creating a better service rather than trying to force more money out of its customers.
