Netflix is continuing to sail through some rough waters. After the streamer enforced yet another price hike amidst a slow-growing subscriber base and tanking stocks, its first-quarter earnings revealed that the company actually lost subscribers in the first quarter of 2022. Originally predicted to pick up around 2.5 million subscribers in the first three months of the year, Netflix lost 200,000 subscribers globally during that period and is expected to lose a whopping 2 million more in Quarter 2. Worst of all for the company is that this comes amid a high point for content with the highly-anticipated second season of Bridgerton and the Ryan Reynolds-led sci-fi flick The Adam Project.
Netflix now sits with 221.64 million subscribers, down from 221.84 at the beginning of January. Both internal numbers and Wall Street Journal analysts saw the streamer picking up subscribers in the 2.5 million ballpark, so the loss comes as a bit of a shock to the system, sending stocks tumbling 22% on Tuesday. A sizeable chunk of the losses come directly from the price hike, something Netflix expected as an estimated 600,000 people dropped the service for that reason. There's also the ongoing war in Ukraine which forced the service to suspend operation in Russia, cutting another 700,000 from the subscriber count per the report. The dip in subscribers highlighted an issue that has been worrying Netflix for a time now: stagnating growth.
Part of Netflix's subscriber growth woes is due to burgeoning competition in the streaming landscape, something the streamer noted in its letter to shareholders. Major networks have since jumped on the streaming bandwagon and thrown gobs of cash and IPs at them to create more heavyweights in the field. Where the streamer once had to carve out a spot between Hulu, YouTube, and Amazon, now Disney+, HBO Max, Peacock, and Apple TV+ stand as other, potentially cheaper, entertainment options. The letter also got its digs in at password sharers, citing the over 100 million non-paying customers as one of the core factors behind stagnating growth.
Netflix hasn't been afraid to explore new means of expanding its service. It announced its jump into the video game industry last July with the hope of capturing a corner of the streaming market untapped by its competition. Recently, the streamer showed it was willing to get a little funky with that concept too with the announcement of an Exploding Kittens animated series that will release with a new mobile game.
Regarding general improvements to user experience, Netflix has also implemented a double thumbs up button as part of a larger push to optimize recommendations. The company has also embraced some lighter changes, adding the comedic "Short-A** Movie" category for people like Pete Davidson who don't want to set aside three hours for a film.
You can read what Netflix had to say in their letter about trying to improve the platform below:
"Our plan is to reaccelerate our viewing and revenue growth by continuing to improve all aspects of Netflix — in particular the quality of our programming and recommendations, which is what our members value most. On the content side, we’re doubling down on story development and creative excellence, which we see reflected in big Q1’22 TV hits like ‘Bridgerton’ (627 million hours viewed for Season 2, our biggest English language series in our history) and ‘Inventing Anna’ (512m hours viewed) — both from our extremely successful partnership with Shonda Rhimes — and films like ‘Tinder Swindler’ (166m hours viewed, our biggest documentary film ever released) and ‘The Adam Project’ (233m hours viewed), which come on the back of our Q4 hits ‘Red Notice’ and ‘Don’t Look Up.’ On the product side, we recently launched ‘double thumbs up’ so members can better express what they truly love versus simply like — enabling us to continue to improve our personalized recommendations and overall experience."