Dubai, United Arab Emirates (CNN) – A bad year for Netflix has turned much worse, after shares plunged earlier this year due to concerns about subscriber growth, the company said it lost a number of subscribers when it announced its first quarter earnings on Tuesday. .
Netflix now has 221.6 million subscribers worldwide. The company reported on Tuesday that it lost 200,000 subscribers in the first quarter of 2022. It is expected to add 2.5 million subscribers, while it expects to lose another two million subscribers in the second quarter of this year.
The report sent the stock down 25% in the post-closing trading period.
The company’s fourth-quarter profit was $1.5 billion, down from $1.7 billion in the previous quarter. Revenue jumped 9.8% to $7.8 billion.
The extent of this report cannot be overstated. The company’s stock is down more than 40% year-to-date, and there has been a lot of anxiety among investors regarding its earnings growth. These concerns came true on Tuesday with the company losing not only the bottom line of its own expectations but losing thousands of sign-ups, which didn’t happen. In the company for more than a decade.
What happened?
In its letter to investors, the company said that since launching live broadcasts in 2007, it has “operated on the firm belief that on-demand entertainment, offered over the Internet, will replace television,” but added that, in the short term, “we are not turning into profits as quickly as we would like.”
Netflix said the pandemic “blurred the picture by significantly increasing our growth in 2020, leading us to believe that most of our slowing growth in 2021 was due to Covid.”
But there are many different factors behind the stagnation of subscribers, including competition from traditional media companies that have entered the market in recent years, as well as widespread password sharing.
The company also blamed other factors affecting many companies at the moment, such as “slowing economic growth, increasing inflation, geopolitical events such as the Russian invasion of Ukraine, and some ongoing disruptions caused by the emerging corona virus.”
The company said the withdrawal from Russia cost it 700,000 subscribers.
The bad report of the company is likely to turmoil the streaming market since many other companies have changed their business strategies to compete with Netflix.
What now?
Netflix told investors on Tuesday that it plans to change by doing what it’s always done: improve the service.
“Our plan is to reaccelerate viewership and revenue growth by continuing to improve all aspects of Netflix – particularly the quality of our programming, which our members value most,” the company said.
The company added that it was “doubling down on story development and creative excellence” and that it launched a “Double Like” tool that will allow members to “better express what they really like versus only what they like.”
The company also said it will focus more on “best ways to monetize sharing” in terms of passwords.
archyde news is another place that can help increase revenue and attract more subscribers to the service.
The company’s CEO, Reed Hastings, has long been allergic to the idea of commercials on the platform, but in a call on Tuesday with analysts, he mentioned that might be possible in the future.
“Those who have followed Netflix know I have been against the complexity of ads and love the simplicity of subscription,” Hastings said in a call after the results were announced. “But as much as I like that, I am a huge fan of consumer choice.” With ads getting what they want makes a lot of sense.”