Netflix has reported a decrease in subscribers in the first quarter of 2022. The entertainment company recorded a loss of about 200,000 subscribers globally compared to Q4 of 2021. The company projects that it will lose up to 2 million subscribers in the second quarter.
“Our revenue growth has slowed considerably,” Netflix acknowledged in its letter to shareholders.
“Covid clouded the picture by significantly increasing our growth in 2020, leading us to believe that most of our slowing growth in 2021 was due to the Covid pull forward.”
Netflix is still the biggest streamer with 222 million subscribers recorded in the quarter. The company is however facing a number of challenges.
Netflix was one of the companies that benefited most from the Covid-19 pandemic as more people stayed online. The number of subscriptions grew rapidly globally, making it one of the most profitable companies despite the economic slowdown.
Netflix raised its monthly subscription prices for the first time in two years in January. As a result, the video-streaming company lost about 600,000 subscribers in the US and Canada only.
Netflix has recently shifted its focus to cracking down on users sharing passwords and login details as it seeks to maximize revenue from existing users. The company says the issue has become such a big headache with over 100 million households accessing the services through shared passwords.
“It’s harder to grow membership in many markets as a result of the situation,” Netflix said.
Netflix has in the recent past announced price increases in different markets. The company is also testing a feature that will prompt users to pay extra fees to add members from a different household to their account. Subscribers will be able to add an extra viewer to their package for a discounted price of about Sh340. The feature is currently being tested in Chile, Peru and Costa Rica.
Along with this, the company will allow users to transfer their profiles to a new account, meaning those who have been leeching on other users’ accounts can migrate their history, lists and recommendations to a new paid account.
Netflix is also facing increased competition from other entertainment companies such as Disney, HBO, Hulu and Amazon who have brought their services online at a cheaper cost. The company is now focusing on improving its content as it seeks ‘creative excellence.’
“Our plan is to reaccelerate our viewing and revenue growth by continuing to improve all aspects of Netflix — in particular the quality of our programming and recommendations, which is what our members value most,” Netflix said in its earnings letter.
“on the product side, we recently launched ‘double thumbs up’ so members can better express what they truly love versus simply like – enabling us to continue to improve our personalized recommendations and overall experience.”
Netflix also says international success is critical to its future. “Over the longer term, much of our growth will come from outside the US,” the company said.
In Kenya, Netflix users are set to witness an increase in subscription fees after the treasury increased the digital service tax rate to three percent starting July 2022.
Netflix also claims that international success is crucial to its long-term prosperity with much of the long-term growth expected to come from outside the United States.