Netflix lost a good amount of subscribers in the first quarter of 2022, marking the first time the streaming giant has lost paid users in more than a decade.
According to a newly released quarterly report, Netflix’s customer base fell by 200,000 subscribers during the January-March period. Per CNBC, the streaming service, which projected it would gain 2.5 million subscribers in Q1, last reported a loss in customers in October 2011.
“Our revenue growth has slowed considerably,” the company wrote in a letter to shareholders. “Streaming is winning over linear, as we predicted, and Netflix titles are very popular globally. However, our relatively high household penetration, when including the large number of households sharing accounts, combined with competition, is creating revenue growth headwinds.”
Netflix attributed the loss in paid customers to the pandemic, saying that COVID-19 “clouded the picture by significantly increasing our growth in 2020, leading us to believe that most of our slowing growth in 2021 was due to the Covid pull forward.”
The company also attributed its subscriber stagnation to widespread password sharing.
“In addition to our 222 million paying households, we estimate that Netflix is being shared with over 100 million additional households, including over 30 million in the [United States/Canada] region,” Netflix said.
Following its quarterly earnings call, Netflix’s stock fell more than 22 percent, closing Tuesday at $348.42 per share.
Also on Tuesday, Netflix co-CEO Reed Hastings said the company is exploring a cheaper ad-supported version, which is something that is currently not offered by the streamer.
“Those who have followed Netflix know I’ve been against the complexity of advertising and in favor of the simplicity of a subscription. But as much as I’m a fan of that, I’m a bigger fan of consumer choice,” Hastings said, per TheWrap. “And allowing consumers who would like to have a lower choice and are advertising tolerant get what they want makes a lot of sense. That’s something we’re looking at now and figure out over the next year or two, but think of us as quite open to offering even lower prices with advertising as a consumer choice.”