Explained: Why Netflix lost over 2 lakh subscribers?
New Delhi, Apr 20: After increasing its subscription base to a record level since the pandemic started, streaming company Netflix, for the first time in a decade, has lost considerable numbers of members in the first three months of 2022.
Between January and March, Netflix has lost over 2 lakh subscribers. However, it will not end here as the company is expecting another 20 lakh people to unsubscribe to its streaming service in the months to come.
"Our revenue growth has slowed considerably as our results and forecast below show. Our relatively high household penetration - when including the large number of households sharing accounts - combined with competition, is creating revenue growth headwinds," the company said as it released its quarterly results.
The last time that Netflix had lost subscribers was way back in 2011.
Nonetheless, the revenue for the first three months is higher compared to last year. It is up by 9.8 per cent as against in 2021 between January and March. That marked a slowdown from earlier quarters, while profits fell more than 6% to roughly $1.6bn.
As per the company, it had 221.84 million (22.8 crore) subscribers at the end of 2021. By the end of March 31, 2022, its total fell to 221.64 million (22.6) subs. It has to be noted that the company had predicted its base to reach 2.5 million (25 crore) for the first quarter.
The Reasons Why Netflix Lost Its Subscribers
The drop in subscriptions is because of multiple factors including the Ukraine crisis, huge competition, economy and the large number of people who share their Netflix accounts with non-paying households.
The company lost 7 lakh subscribers after the company decided to close shop in Russia.
"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," the company said to its investors.
In an attempt to stop people from sharing accounts with other households, the streaming company recently announced a crackdown in Chile, Costa Rica and Peru. It is expected to be expanded to other regions.
Company Lists Out Reasons
"First, it's increasingly clear that the pace of growth into our underlying addressable market (broadband homes) is partly dependent on factors we don't directly control, like the uptake of connected TVs (since the majority of our viewing is on TVs), the adoption of on-demand entertainment, and data costs."
"Second, in addition to our 222m paying households, we estimate that Netflix is being shared with over 100m additional households, including over 30m in the UCAN region."
"Third, competition for viewing with linear TV as well as YouTube, Amazon, and Hulu has been robust for the last 15 years. However, over the last three years, as traditional entertainment companies realized streaming is the future, many new streaming services have also launched."
"Fourth, macro factors, including sluggish economic growth, increasing inflation, geopolitical events such as Russia's invasion of Ukraine, and some continued disruption from COVID are likely having an impact as well."
Netflix Plans in India
- Netflix slashed the price on its monthly subscription rates by up to 60 per cent in India in December 2022.
- Netflix's Mobile is available at Rs 149 a month (from Rs 199 earlier), while the Basic plan is priced at Rs 199 a month, instead of Rs 499.
- The Standard plan is charged at Rs 499 per month, while Premium is available at Rs 649 a month.
- These plans were earlier charged at Rs 649 and Rs 799, respectively.