Netflix lost customers for first time in a decade, considers cheaper tier with ads

Netflix posted its quarterly report yesterday, and the numbers for January-March looked uninspiring. The streaming company expected to add 2.5 million subscribers, but instead, it lost 200,000 for the first three months of the calendar year.

The number tanked the company stock, which lost over 25% in after-hours trading

Reed Hastings, Netflix CEO, said he personally was against “the complexity of advertising” and prefers “the simplicity of subscription” but he is also “a fan of consumer choice”, meaning the company is considering an introduction of a cheaper tier with ads.

During the same January-March period in 2021, Netflix recorded an influx of 4 million paying users, but now it recorded only 0,5 million. However, since the platform pulled out of Russia, it lost 700,000 users, resulting in a net loss of customers - the first time this has happened since October 2011.

The main challenge ahead remains soft acquisition, but Reuters reminded that 100 million household in the US are already paying for Netflix and the company should look for expansion in other regions. There is also a fierce competition from rivals such as HBO Max and Disney.

All major streaming services are expecting a slower growth, with Netflix in particular forecasting 2 million more people to stop paying in the next three months, despite the return of big titles such as “Stranger Things” and “Ozark”.

These numbers resulted in a shocking drop in value, with Netflix stocks losing 26% after the bell on Tuesday, erasing $40 billion of value. The downdraft caught competitors as well - Roku fell 6%, Walt Disney reported a 5% decline, while Warner Bros Discovery was down 3.5%. Ever since Netflix stated it expects a weak subscriber growth in January, it lost half of its value.

--Agencies