Netflix has written a letter to shareholders advising them that the revenue growth of the streamer has slowed considerably. The letter was shared today as part of the company’s latest financial results, which were rather disappointing and revealed the loss of 200,000 subscribers in the first quarter of 2022.
Netflix has blamed the stagnation on various factors, with one being password sharing: the streamer has estimated that over 100 million households are using shared passwords and enjoying The Witcher, Ozark, and other of the streamer’s hit shows at no additional cost, with over 30 million freeloaders residing in the United States and Canada alone.
Other reasons that Netflix gave for its less-than-stellar performance include costs of broadband, increasing competition in the form of other streaming services, and inflation. Netflix’s decision to hike the pricing of its monthly subscription plans probably isn’t helping, either.
Letter to Shareholders (Netflix Investors)
First, it’s increasingly clear that the pace of growth into our underlying addressable market (broadband homes) is partly dependent on factors we don’t directly control, like the uptake of connected TVs (since the majority of our viewing is on TVs), the adoption of on-demand entertainment, and data costs. We believe these factors will keep improving over time, so that all broadband households will be potential Netflix customers.
Second, in addition to our 222m paying households, we estimate that Netflix is being shared with over 100m additional households, including over 30m in the UCAN region. Account sharing as a percentage of our paying membership hasn’t changed much over the years, but, coupled with the first factor, means it’s harder to grow membership in many markets -an issue that was obscured by our COVID growth.
Third, competition for viewing with linear TV as well as YouTube, Amazon, and Hulu has been robust for the last 15 years. However, over the last three years, as traditional entertainment companies realized streaming is the future, many new streaming services have also launched. While our US television viewing share, for example, has been steady to up according to Nielsen, we want to grow that share faster. Higher view share is an indicator of higher satisfaction, which supports higher retention and revenue.
Fourth, macro factors, including sluggish economic growth, increasing inflation, geopolitical events such as Russia’s invasion of Ukraine, and some continued disruption from COVID are likely having an impact as well.
Discussion (19 replies)
Join Discussion →Netflix is the next blockbuster.
Maybe they should add better content.
Most of the shows I watched when I joined netflix have all gone and I can't seem to find a lot of new interesting content, Fargo season 4 is still MIA.
Currently looking forward to the new season of Better call Saul and Russian doll, not much else on my radar atm.
I'd suspect the price hike they did also didn't help.
I'm only interested in one show on netflix right now and they have been sitting on the second season for two years. For no apparent reason.
The show was actually renewed for a second season, but by now I guess regular viewers just assumed it was cancelled and moved on.
For a while years ago I used my family's Netflix account to watch stuff like Family Guy. Then they removed the stuff I watched, so I went back to using community releases. Never much cared for streaming. Sometimes it was convenient, but in the end it usually just annoyed the f*ck outta me. I have always relied on local media, and so far nothing has changed that, and I doubt anything ever will change that for me.
I have a netflix subscription, but I'm so dastardly that I pirate stuff even if it's on netflix.
No, the actual reason is that it's just more convenient to put a torrent into my download queue, and whatever I put there just appears on my media server share, which then can be viewed on any screen in the house. As opposed to netflix which has a crap inconvenient UI, that's not even standardized or available on all devices.
The idea that piracy is a service problem is proven right, again.
I have Netflix, but honestly if it wasn't for my wife using it, then it would probably be gone.
Nah, adding all "their" new super extra woke content (worst than Disney now, imagine that ?) every week to the Netflix's library did not run off customers either, right?! ?
Nope! Just what they've claimed it to be and ignoring everything else on purpose, as usual.
I see, in a near future, that millions (tens) will *unplug* from "their" utopia.
they lose 200,000 subs
out of their current 200,000,000 subs
drop, meet bucket
Theres so much contents in Netflix, i don't see how anyone cant find anything to watch.
I do know one reason though, you dont have your own profile!. I used to have a 'family' profile which due to the fact that my wife used it multiple times more, well she would find all manners of things... Tailored to her... Nothing for me. I had to make my own profile, and the algorithm pulls plenty of stuff for my taste ( as you watch and rate) more than I can watch tbh.
That's usually how it always starts, right? Very small in comparison to previous earnings reports and most of that is just to ease investors' concerns. Until... BAM!
Just-in!
"its latest results, the company says it lost 200,000 customers in Q1 and **forecasts a further loss of 2 million** in Q2."
https://www.broadbandtvnews.com/2022/04/20/netflix-loses-subs-considers-advertising/#:~:text=Netflix lost customers for the,of 2 million in Q2.
And that unconfirmed number could be much higher overall. Hookerwood is long overdue for a major disastrous shake-up!
Good riddance and about time!
The share price called and want their drop in the bucket back.
I've been a steady subscriber since... idk, a long time now.
This is the first time I'm considering dropping it. It's turned out about like cable did: sure, there's tons of stuff, most of it is crap. And now, the price is much higher than other services - I watch more HBO and Amazon than anything lately, and the two of them together don't cost what I'm paying for Netflix.
The only thing I really appreciate about Netflix is that their feature stuff takes the time to film in HDR and Surround.
Time to go the "Subscribe when you get a show to watch, drop it when you're done" model.
Yup. It's not about the number. It could be a drop of 2, for all that matters. The important part is that it's a drop. Wall Street only rewards growth. Everything else is losing. What could possibly go wrong with that model?
Yeah, the family and I have chosen this approach ~Christmas last year and we are enjoying our local content, Kodi/Plex, a lot more recently.
We've had it for a long time now, maybe close to 10 years. For me, at this point, there's not a lot to watch. I check it a few times a week but over the last few years there's been less and less I'm interested in and as far as their exclusive stuff goes I barely make it beyond a few minutes. I'm glad they exist but I really don't like the slow boil, almost dead, pace most of their series have. The movies, well, there's been a few I really liked but most of the time meh is as good as I can say for them. There are a few things my wife likes to watch there and she probably watches it a lot more than I do.
However, blaming the whole password-sharing thing seems grossly out of proportion to me. Seems like they can't accept all the other players in the streaming market these days. We spend far more time on Paramount+, HBO Max, Prime, and Disney+ than anything else due to their exclusive series and movies. Not to mention they all stream various things in 4K/HDR/Dolby Vision-Atmos now. Occasionally we'll watch something on Hulu and every once in a long while we'll find something on Peacock. We don't have any interest in Apple TV. The bottom line, though, is that Netflix has a lot more competition than it used to and they need to worry more about that and hold off on more price increases than putting blame on password-sharing.