Netflix loses subscribers for the first time in a decade, blames account sharers

[Tudor Cibean]

TL;DR: Netflix has just reported a loss of 200,000 subscribers since the beginning of the year. They're blaming this on password sharing, increased competition, as well as their withdrawal from the Russian market. The news caused the company's stock to drop by over 25% in after-hours trading.

Netflix's subscriber growth has been slowing for some time now after seeing record numbers at the beginning of the pandemic. Today, Netflix reported a net loss of 200,000 subscribers globally during the first quarter, the first decline in paid users since October 2011. It also expects to lose a further 2 million in the second quarter of this year.

The price hike back in January is partly to blame, as the company says it's lost 600,000 subscribers across the US and Canada. With inflation heating up, it's no wonder that people are cutting down on non-essential spending.

Last month, Netflix suspended its service in Russia in response to the invasion of Ukraine. Today's earnings report confirms that this has resulted in a loss of about 700,000 subscribers.

Competition in the streaming landscape is also more fierce than ever, with more entertainment companies launching their own services, many being cheaper. Just last month, Disney announced that they would be adding a more affordable tier to their streaming platform later this year.

Netflix ended the quarter with around 222 million subscribers, which means it's still easily the largest streaming platform. However, they estimate that accounts are being shared with over 100 million additional households. No doubt, they are looking at ways to curb that.

The company initially expected to end the quarter with an additional 2.5 million subscribers, way less than the 4 million it gained in Q1 2021. Today's report sent the Netflix stock plunging by about 25% in after-hours trading.

Image credits: John-Mark Smith (masthead), Muaaz

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https://www.techspot.com/news/94278-netflix-loses-subscribers-first-time-decade-blames-account.html

 

[Shaun2312]

Couldn't possibly be the price hikes we keep getting...

 

[Raytrace3D]

I became a subscriber after someone shared their account with me... so, thanks subscriber sharer person!

 

[gigantor21]

Couldn't possibly be the price hikes we keep getting...

From the article:

"The price hike back in January is partly to blame, as the company says it's lost 600,000 subscribers across the US and Canada. With inflation heating up, it's no wonder that people are cutting down on non-essential spending."

 

[Usukosej]

They left the Russian market and then blames account sharing for lower subscriber numbers, makes sense

 

[Squid Surprise]

I love how whenever a company starts to lose money, the blame goes on piracy (or account sharing).

Since there is no way to prove the effects of account sharing, it's a very convenient scapegoat... except... when they were raking money in hand over fist over the past few years - was account sharing OK?

No company can expand forever - there is a fairly fixed population(yes, I know it's rising - but not quickly enough to maintain infinite growth in any market).

 

[JKnight]

These streaming companies are worse as the cable companies they replaced.

 

[SG736F6]

Maybe they should stop raising the prices. A few more years and it might be cheaper to go back to cable. Or just drop it entirely.

 

[m4a4]

With such dumb excuses, it sounds to me they want people to raise the flag....

 

[CrazyDave]

No company can expand forever - there is a fairly fixed population(yes, I know it's rising - but not quickly enough to maintain infinite growth in any market).

Well said. Netflix has pretty much saturated their market. They'll never see growth again like they had. This isn't a bad thing, it should mean their income is consistent, just not growing. Their fight now, will be to hold onto what they have, given the amount of subscription streaming services popping up all over the place.

I think most shareholders have the incorrect view that the growth must go on forever, it's impossible.

Edit: As for the account sharers, most probably wouldn't sign up directly, or they already would have. Netflix is making lots of noise over nothing here.

 

[Burty117]

Here in the UK it was in the news most streaming services lost hundreds of thousands of subscribers due to the cost of living going up across the board.

People are having to make choices like having hot water vs Netflix and well, hot water is more important.

The housing market is completely broken in the UK, fuel prices are just getting silly and so is electric / gas, something has to give eventually. My monthly for electric and gas went from £191 to £398 in the last month, I can understand why lots of people cancelled their subscription.

But oh no, lets blame it on pirates or "account sharers"...

 

[GoldenGoat]

I don't think they are losing customers due to account sharing. This would imply people are dropping subscriptions and using someone else's just to avoid paying. I'm not involved in any account sharing and I don't support account sharing, but I have a hard time believing this is the cause of subscriber loss. Subscriber loss is coming from inflation and their decision to raise the price. Not everyone is getting a cost of living raise at the same rate as inflation and therefore can't afford to pay for everything they use to be able to afford.

 

[ypsylon]

Me personally never seen any appeal in streaming services. With Netflix I had literally 2 months of experience across 2 different trial runs. To this day I have no idea what's so amazing about it.

In Europe prices for every utility going up and up. There is zero surprise that like million or two European subscribers will cancel or already did. Like Burty117 above said about UK, there are more important things in life than Netflix. I'm subscription free on every front and I don't have to worry about endless drain on resources. Online subscriptions are cancer 101%.

Netflix like any corporation or dictator search for scapegoats while in reality they are at fault and only they.

 

[viperfl]

Right now I pay $15.49 a month for Netflix and that's only being able to stream to 2 devices. When Netflix first started out they were top dog because there were no other streaming services to compare. Now you have how many streaming services?

It wasn't an issue sharing accounts when Netflix was top dog and no competition. But now that the streaming service field is getting saturated with paid and free streaming services, now it's becoming an issue. With Netflix your paying a premium to not see any ads. Unlike Netflix, Hulu charges to see ads and a higher price not to see ads. Maybe Netflix should also implement 2 tier pricing, a lower price to see ads and a higher price not to see ads.

Streaming services that have their own created content are not willing to share. Paramount + removed Star Trek off of Netflix and Hulu to keep it on their own streaming service. You won't see any Star Wars movies on Netflix because Disney is keeping it for themselves. Most of the TV shows you see on CBS and NBC streaming service you won't see on Netflix because they keep it for themselves. Yeah Netflix created their own content and won awards but it's not enough.

The other problem is you have most if not all the streaming services showing the same thing with exceptions of having exclusive content. I know people who pay for multiple streaming services because all the shows they like are not all on one streaming service.

When all is said and done your paying how much to serve your craving?

 

[Alexmx]

I pay for 4 device streaming, netflix shouldn't give a flying fsck about who is streaming as long as is not over 4 devices.

 

[Squid Surprise]

I pay for 4 device streaming, netflix shouldn't give a flying fsck about who is streaming as long as is not over 4 devices.

It's funny... cause Amazon Prime lets me stream from virtually unlimited devices (I think it's like 100), and I don't see any articles saying that this is costing them subscribers or revenue...

 

[Ojref]

Wouldn't have anything to do with their poor quality content that's mainly liberal-leftist dreck either.

 

[colinf]

Poor headline

Netflix partly blames password sharers for a drop in subs it also acknowledges economic factors and removal from Russia

 

[NicktheWVAHick]

It’s Putin’s fault.

 

[Dr Roboto]

IMO, it is an increase in cost Plus poor content. I used to watch Netflix quite frequently, but the last 6 months or so I can't find very much worth watching. There is a lot of content, but IMO it is average quality at best. I feel like half the content is now dubbed to English from French or Japanese. Overall, the quality and exciting content just is not there for me any more. Everything I like seems to end after one maybe two seasons. I have been thinking about canceling for the last several weeks, so I am not surprised by the losses they are seeing. There is just too much competition out there and they have most likely reached their max number of subscribers.

 

[wiyosaya]

I love how whenever a company starts to lose money, the blame goes on piracy (or account sharing).

Since there is no way to prove the effects of account sharing, it's a very convenient scapegoat... except... when they were raking money in hand over fist over the past few years - was account sharing OK?

Tracking IP addresses might be one way. I am willing to bet that they can tie an IP address to subscriber ID, and, assuming no VPN involved, or even if there is since the VPN has to come from an IP address, they can likely determine when a particular user ID is logged in from more than one IP address.

That said, it is really their own fault, IMO, since they encouraged account sharing in the past. They were likely thinking that account sharing would encourage those getting the free-ride to pay their own way; but I think it safe to assume that people DGAF when they are getting something for free.

No company can expand forever - there is a fairly fixed population(yes, I know it's rising - but not quickly enough to maintain infinite growth in any market).

IMO, the more likely culprit is the number of services available, and the fact that people do not want to subscribe to several services especially when they rarely watch a few. Personally, I am planning on picking up Hulu for a month, watching what my wife and I want to catch up on, then dropping it again.

Not to mention, my local public library has an extensive collection of DVD/Blu-ray that I can borrow for an absolute minimal cost - and some of it is produced by the likes of Paramount+, HBO+, etc. It just takes delaying gratification to frugally enjoy streaming content released to disk. I've seen no signs of shows like The Mandalorian on disk from Disney+, but that's solved by a month's subscription - then unsubscribing.

Wouldn't have anything to do with their poor quality content that's mainly liberal-leftist dreck either.

I thought it was MTG's space lasers.

These streaming companies are worse as the cable companies they replaced.

I cannot agree. Before I dropped it, I was paying $84+/month to Dish Network for 500 channels of useless of which I watched only 4. Now, not including the $50/mo I pay for FTTH, I am paying $15/mo for Netflix. True, Netflix has so much stuff that my wife and I cannot possibly watch it all, however, I'd rather pay $15/mo for too much stuff to watch than $84+/mo.

And like I said above, with the plethora of streaming services, it is possible to subscribe to a service for a month, watch what you want, then unsubscribe. For the most part, when I left Dish Network, there was no easily navigable library of content to thumb through.

 

[Aceseven]

Too many streaming services honestly, they toppled king cable but none of them are big enough to wear the crown now because they chop each other down.

 

[BigRedPDX]

Netflix doesn't have content that I really want to watch. It's that plain and simple for me. I tossed Netflix and went with Hulu, where I can watch Ancient Aliens, Family Guy, Bob's Burgers, and Stargate Atlantis. I'm not having a Netflix and chill night.

 

[SG736F6]

I pay for 4 device streaming, netflix shouldn't give a flying fsck about who is streaming as long as is not over 4 devices.

This! This right here. I agree 100%. We pay for four streams at once, who the hell cares if its in another house. You already have our money. Greed!

 

[SiJiL]

This! This right here. I agree 100%. We pay for four streams at once, who the hell cares if its in another house. You already have our money. Greed!

Agreed, and if they want us to not use 4 streams, offer us a smaller package. I originally had the HD package which comes with 2 streams which was perfect. Then I wanted to upgrade to UHD which also meant paying for 4 streams. If you don't want me to put those extra 2 streams to use, let me buy a package with UHD and 2 streams for a bit less per month.