San Francisco: Netflix reported on Tuesday losing subscribers for the second quarter in a row as the streaming giant battles fierce competition and plateauing demand. However, the loss of 970,000 paying customers in the most recent quarter was less than expected, leaving the company with just shy of 221 million subscribers.
“Our challenge and opportunity is to accelerate our revenue and membership growth… and to better monetise our big audience,” the firm said in its earnings report. After years of amassing subscribers, Netflix lost 200,000 customers worldwide in the first quarter compared to the end of 2021, which sent its share plunging.
The streaming giant reacted by announcing the arrival of advertising on the service, with the aim to finance the investments necessary to maintain its position as a leader in the industry that it launched. Analysts noted the results, even if less bad than feared, still weren’t great news.
“Netflix’s subscriber loss was expected but it remains a sore point for a company that is wholly dependent on subscription revenue from consumers,” said analyst Ross Benes. Benes added that “unless it finds more franchises that resonate widely, it will eventually struggle to stay ahead of competitors that are after its crown.
Netflix executives have also made it clear the company will get tougher on sharing logins and passwords, which allow many people not to pay to access the platform’s content.
“It’s great that our members love Netflix movies and TV shows so much they want to share them more broadly,” director of product innovation Chengyi Long said Monday in a blog post. “But today’s widespread account sharing between households undermines our long-term ability to invest in and improve our service.”
Long said that an “add a home” feature that Netflix March began testing in Chile, Costa Rica, and Peru will be expanded to Argentina, the Dominican Republic, Honduras, El Salvador, and Guatemala. In an effort to draw new subscribers, Netflix will work with Microsoft to launch a cheaper subscription plan that includes advertisements.
Netflix opted to develop the lower-cost offering after a disappointing first quarter in which it lost subscribers for the first time in a decade and after years of resistance against the very idea of running ads. The ad-supported subscription will be in addition to the three options already available, the cheapest being $10 per month in the United States.
Microsoft will be responsible for designing and managing the platform for advertisers who want to serve ads to Netflix users.