In a note to shareholders, Netflix reports that its revenue growth has “slowed considerably”. This news comes after losing 200,000 subscribers last quarter and potentially two million this current quarter. The streaming giant is navigating fierce competition with other services as well as having over 40% of its user base being unpaid subscribers.
CNBC reports shares of Netflix dropped more than 20% after hours on Tuesday due to a loss of subscribers. The Wall Street Journal even mentions that the company’s stock has declined by more than 40% so far this year.
Reasons for slowed growth
Netflix attributes multiple “inter-related factors” to its stunted growth. With over 222 million paying households, their subscriptions are being shared with over 100 million more homes. 30 million of these unpaid accounts are in the United States and Canada. Netflix states it’s been “harder to grow membership in many markets” because it’s an issue that was “obscured by [its] COVID growth”.
The company has recently cracked down on password sharing by testing a new add-on to its service. This add-on that lets users “easily and securely” share their Netflix password by only “paying a bit more”. By doing this, Netflix hopes to avoid password sharing and boost its revenue.
Competition between streaming platforms has also been heating up. YouTube, Amazon, and Hulu have been long-time competitors. It has been especially difficult in the last three years as more services have joined the market like Apple TV+, Disney+, and others.
Poor economic growth, rising inflation, and the war between Russia and Ukraine have also impacted these results.There’s even been “some continued disruption from COVID” impacting the company. The shareholder note also stated that it lost 700,000 subscribers in Russia by eliminating its service there.
Netflix’s plans for growth moving forward
Netflix plans to redeem itself by focusing on the quality of its programming and recommendations for its viewers. Recently the platform added a “two thumbs up” rating to improve recommendations.
In order to fuel growth in other countries, the streaming giant is also creating more original content outside of the United States. The company is now expanding its international market by producing movies and TV in over 50 countries. Non-English language shows like Squid Game, La casa de Papel, and All Of Us Are Dead have been big hits for the platform.
Have you canceled any streaming subscription services lately? Do you still subscribe to Netflix at all?
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