Netflix Lost Subscribers Last Quarter. Now What?
Netflix (NFLX), the streaming industry leader, announced this week it had lost subscribers during its most recent quarter. The news sent the stock’s share price tumbling for the second time this year. Its first sell-off came after executives reported they expected to add fewer new subscribers for this year as a whole, compared to 2021.
Company officials cited a number of ongoing challenges Netflix is facing, including inflation and geopolitical unrest, as the platform lost around 700,000 subscribers by shutting down its service in Russia. Netflix also considers password sharing a big problem, as it’s estimated around 100 million households use accounts that are paid for by the company’s 222 million existing subscribers.
Ad Tier Acceptance
In an effort to promote subscriber growth, Netflix says it’s considering something it long resisted: an ad-supported tier. Some of its competitors like Hulu, Disney+ (DIS), and HBO Max have already offered a cheaper subscription option that includes commercials.
During an interview with analysts earlier this week, Netflix executives said an ad-supported tier now makes sense. This comes as the company has lost a significant number of subscribers in the US and Canada, to the tune of 600,000, which was blamed on a recent price hike. Executives also maintain most of its long-term growth will be in markets outside North America.
Past Its Peak?
As the streaming industry pioneer, some wonder if Netflix has already topped out in terms of growth, especially as competition increases from other platforms. The company’s announced loss of subscribers had a negative effect on some of its peers. Warner Bros. Discovery, Paramount Global (PARA), and Disney all saw their share prices slip following Netflix’s earnings call.
While the modern era of streaming television continues to play out, there’s plenty to suggest Netflix still has room to grow. For example, research shows 56% of US households that are connected to broadband internet use Netflix, meaning just under half the market is still available. Competition is robust, and getting TV over the internet is no longer a novel concept, so Netflix is cracking down on password sharing — and considering ads.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.