Bad times for Netflix. The streaming giant lost 200,000 subscribers in the first quarter of 2022, a first in more than ten years, with serious consequences for the group on the New York Stock Exchange (United States), this Wednesday, April 20.
Immediate economic consequence of this drop in subscribers: Netflix fell by more than 30% on the stock market on April 19, a loss of more than 40 billion dollars, the equivalent of nearly 37 billion euros. “We know that the loss of subscribers is disappointing for our investors,” admitted Reed Hastings, co-founder of the platform, during an analyst call. “We are determined to (…) get back into their good graces.”
Netflix currently has 221.64 million subscriptions. This fall in the number of subscribers is due to the suspension of its activities in Russia, after the invasion of Ukraine. 700,000 subscriptions were therefore lost. “Without this impact, we would have had 500,000 additional subscriptions”, indicates the platform in its press release. This is much less than the 5 million new subscribers in the first quarter of 2021.
Banking on an initial increase of 2.5 million additional subscribers, the streaming group finally lost fans subscribing to its subscription offer in the first quarter of 2022. This trend should be confirmed, since the group has forecast a further drop. subscribers for the second quarter of the year.
Subscriptions “with advertising”
To rectify the situation, Netflix is considering several solutions, including advertising. The company has been hostile to it since its inception, but the situation has changed. Its turnover continues to increase (+10% in one year, for a total of 7.9 billion dollars) thanks to the increase in tariffs, but the net profit, that is to say the difference between revenue and expenses, is down. It amounted to 1.6 billion dollars against 1.7 billion dollars in the first quarter of 2021.
Netflix should therefore offer cheaper subscriptions with advertising within one or two years, in addition to the current formulas. “If you want the ad-free option, it will always be possible,” assured Reed Hastings. “If you prefer to pay less and tolerate ads, there will be an offer for you too.”
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Beyond this new model, Netflix has estimated that around 100 million households are not paying their subscriptions. Password sharing will soon be regulated. Trials are underway in Costa Rica, Chile and Peru. With these different measures, Netflix hopes to raise the bar and not be left behind by Disney+ and AmazonPrime.
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