Netflix announced on Tuesday during its earnings report that the company lost subscribers for the first time in more than a decade in Q1 2022.
So far, the company has lost more than 200,000 subscribers in Q1, and the losses are expected to continue.
During the first quarter of 2022, Netflix was expected to add 2.5 million subscribers but failed.
With the cancellation of its business in Russia, Netflix lost 700,000 subscribers. If it had not lost those customers, Netflix would have 500,000 additional paid global subscribers, still well below its projections.
The streaming platform also lost a great deal of customers in the United States and Canada due to new pricing changes. According to Netflix, this loss was expected.
Netflix claimed in a letter to shareholders that revenue growth has “slowed considerably,” blaming “a large number of households sharing accounts” and “competition” for the decline. Netflix estimates that its 222 million paying subscribers share their content with another 100 million households who aren’t paying.
The company has stated that it will implement “more effective monetization of multi-household sharing” in the future, implying that it will soon install mechanisms to restrict account sharing. In March, Netflix began testing an additional fee for users who share their Netflix accounts with others outside their families.
Customers can pay an extra price to share their Netflix accounts with two persons outside of their household in Netflix’s current test markets of Chile, Costa Rica, and Peru. Netflix stated at the time of the test’s introduction that it was working to “understand the utility of these two features” before implementing adjustments in other regions.
Netflix has long had language in its terms and conditions prohibiting account usage by multiple homes, but the service has overlooked password sharing until now. Netflix has also increased its prices, with a 4K streaming option costing $20 per month.
Netflix is the only streaming service that charges based on the quality of the feed. Netflix charges $9.99 for the Basic no-HD plan, $15.49 for the Standard HD plan, and $19.99 for the Premium plan.
By Q2 2022, Netflix is expected to lose two million subscribers. The company intends to mitigate the losses by addressing password sharing and offering an affordable ad-supported plan soon.
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