Netflix is in a dark place right now, and according to the streaming service’s CEO, greater loss is on the cards.
Netflix could lose millions of subscribers
Spence Newman, in a letter to investors, revealed that the worst is yet to come at Netflix after first quarter earnings showed a 200 000 drop in subscriptions, the first decline of this magnitude in the streaming services history, per IGN Africa.
Much of the blame in the massive decline can be attributed towards the entry of competition in the streaming market. However, co-CEO Reed Hastings told investors that what is in their control, in efforts to turn the tide, is clamping down on password-sharing, a phenomenon the company knew about for a long time but failed to act on it.
According to quarterly performance figures, Netflix has 222 million subscribed households. While the streaming giant concedes it may have reached a ceiling in the growth spurt it experience at the start of the COVID-19 pandemic, it has identified 100 million households that benefit from paying subscribers with password-sharing.
No mention was made on how Netflix plans to address this phenomenon. However, the giant has made it abundantly clear that after turning the cheek on password-sharing, the time has come to put an end to it.
“Early last year we started testing different approaches to monetize sharing and, in March, introduced two new paid sharing features, where current members have the choice to pay for additional households, in three markets in Latin America. There’s a broad range of engagement when it comes to sharing households from high to occasional viewing. So while we won’t be able to monetize all of it right now, we believe it’s a large short- to mid-term opportunity,” Netflix told investors.
On the bright side, Netflix revenues saw a 10% increase year-on-year and the streaming service expects to maintain this trajectory in the next quarter.
But, its policy on Russia means that it will have to live with losses of up to two million subscribers in the near future. This, however, will be a short-lived period of turbulence, Newman stressed.
“We’re not expecting our revenue growth to reaccelerate before the end of the year, but we will grow revenue, and there will be paid net add growth. As we get to the back half of the year, Ted talked about the stronger slate, we get further away from some of the big price increases, we get into a stronger seasonal period, so I just want to make sure that’s understood as you think about the full year even though we’re not providing full-year guidance,” he said.
