Things have gone from bad to worse for Netflix. In a time when streaming services are more a part of our every day than ever, you would think the service that pioneered the concept would be on top. But due to a multitude of factors, the streamer has taken another massive hit in the stock market.
As reported by Deadline, Netflix stock fell by a painful 20% today in after hours trading. The steep drop came after the company delivered surprisingly bad news in its first quarter report. Not only did Netflix fail to meet its comparatively modest projection of $2.5 million new subscribers, it actually went in the other direction. Netflix instead reported a loss of 200,00 subscribers, and is projecting it will lose another 2 million subscribers in the year’s second quarter. Deadline reports it’s the first time in over ten years that the streamer has posted an actual loss to its subscriber base.
To put this in context, it’s worthwhile to remember what happened in January. Netflix stock plummeted by 22% in a single day after the streamer reported less growth than expected. That’s what happened after the streamer reported that it had missed its subscriber total by 200,000 — totaling at 8.3 million rather than 8.5 million. If that’s what happens when the streamer has less growth than expected, what happens now that their numbers have actually dropped?
One of the factors that is clearly eating away at Netflix’s lunch is a much more crowded marketplace. As reported by CNBC back in February, in particularly Disney+ and HBO Max continue to gain on Netflix, though the latter streamer is still far in the lead. Add to that Peacock, Hulu, Apple TV+, Paramount+, and more, and you’ve got plenty of competition that didn’t exist when Netflix started streaming in 2007. Deadline says that in the wake of today’s news, the lead streamer is finally beginning to openly acknowledge the impact of the other services.
Among other factors, Netflix also blamed a “back-end weighted content slate” — claiming that popular titles like the new season of Bridgerton and Ryan Reynolds’ The Adam Project came out too late in the quarter to have a significant positive impact on subscriptions. There’s also the impact of Russia’s invasion of Ukraine. Netflix, like most other streamers, stopped service in Russia, and the streamer estimates it lost around 700,000 subscribers as a result.
But then there are contributing factors that Netflix may not want to admit to quite so loudly. Earlier this year, the streamer’s standard monthly subscription plan increased to $15.49 per month, already making it a less attractive choice compared to other streamers. Then in March, as reported by THR, the company announced it was using countries in South America to test a new subscription model that would charge subscribers extra for sharing their accounts with others.
So, on top of making their most popular subscription plan the most expensive in the market, they announced plans to add yet another extra charge that none of the other streaming services have levied. And they expected growth?