The people have spoken. Netflix shares tanked 25% after the trailblazing content streamer reported that 200,000 households unsubscribed in the first business quarter.
The drop in subscribers are the result of a perfect storm as Netflix deals with the constant threat of rising competition, protested price hikes, the suspension of service in Russia due to the war with Ukraine, and…password piracy.
Redbox, traditional cable, and the movie theaters used to be Netflix’s only competition, but now the big red “N” has to worry about Hulu, Amazon Prime Video, Apple TV, and several major studio hosted streaming apps.
To top that, consumers were bewildered by Netflix’s decision to increase the price of its plans by a few dollars. And without any piracy protections that would prevent subscribers from sharing their passwords with others, Netflix was losing out on potential new subscribers to the tune of 100 million. About 30 million of those additional households are in North America.
Now, Netflix is predicting that the second quarter will be even worse with a loss of 2 million global subscribers — a total opposite forecast from the increase of 2 million-plus subscribers that Netflix previously predicted. Netflix hasn’t experienced a drop this huge in subscribers in the last decade.
On the upside, the company, which has a 222 million subscriber base, experienced a 10% increase in revenue, reporting $7.87 billion in the first quarter, while the price per share rose to $3.53, higher than the forecasted $2.89 per share.
In order to combat subscription stagnation or loss, Netflix plans to lower prices via ad-supported options and rollout password-sharing prevention tactics in the near future.
