SAN FRANCISCO (AP) – A sharp drop in subscribers on Wednesday turned into a free fall in Netflix stock, forcing the company to reconsider its ad experiments and – taken the remote – to crash into millions of free downloaders using Password. shared by friends or family.
The planned changes announced at the end of Tuesday are designed to help Netflix rebuild the momentum lost last year. The pandemic-induced lockdown that led to so many viewing was lifted and deep-seated rivals like Apple and Walt Disney began to liberate their large audiences with their own streaming services.
Netflix’s customer base dropped 200,000 in the January-March quarter, the streaming service’s first shrinkage since it became available worldwide six years ago, with the exception of China. The decline was partly due to Netflix’s decision to leave Russia to protest the war against Ukraine, which resulted in the loss of 700,000 subscribers. Netflix expects to lose another 2 million subscribers in the current April-June quarter.
The sharp collapse, followed by a year of slow growth, has caused great concern among Netflix investors. The company’s shares fell 37% on Wednesday afternoon. If shares close at this level, sales could destroy nearly two-thirds of Netflix’s market value since the end of last year, which destroyed $ 170 billion in shareholder wealth in less than four moon.
The impact on current Netflix users won’t be clear for some time. For David Lewis in Norwalk, Connecticut, it doesn’t seem like a big deal. Lewis shared a premium plan with his three adult children and some of their friends and said they would continue like this, even if they had to part ways with friends and each would pay their own bill.
“We’ll keep Netflix and pay for all four of our families, even if it’s more,” he said. “We love the service and what it offers.”
In Los Gatos, California, the company is estimated to have approximately 100 million households worldwide View its service for free Using the account of a friend or family member, including 30 million in the United States and Canada.
“This 100+ million households choose to watch Netflix,” said Reid Hastings, CEO of Netflix. “We just need to get some quality for them.”
To get more people to pay for their accounts, Netflix has indicated that it will expand its pilot program to run in three countries in Latin America: Chile, Costa Rica, and Peru. In these areas, subscribers can extend the service to another household at a discounted price. In Costa Rica, for example, Netflix plan prices range from $ 9 to $ 15 per month, but subscribers can explicitly share their services with other families for $ 3.
Netflix does not offer any additional information on how the cheap ad-supported service will work or how much it will cost. Another competitor, Hulu, has long offered an ad-supported tier.
While Netflix clearly believes these changes will help rely on its current 221.6 million subscribers worldwide, these measures threaten to alienate customers until they cancel.
Netflix followed consumer feedback in early 2011, when it announced plans to start paying a fee for its then-streaming service, which would include a traditional DVD-by-mail service before international expansion. In the months following the change, Netflix lost 800,000 subscribers, prompting Hastings to apologize for the delay in the spin-off performance.
Tuesday’s announcement was a shocking insult to the company, which rose two years ago when millions of home users were desperate for diversion, an empty Netflix is happy to fill. Netflix added 36 million subscribers in 2020, the largest annual increase since the debut of its video streaming service in 2007.
But Hastings now believes these good results could blind management. “COVID has made a lot of noise about how you should read the situation,” he said in a video conference on Tuesday.
Rising inflation over the past year has also lowered household budgets, forcing more consumers to limit spending on discretionary products. Despite this pressure, Netflix recently raised prices in the United States, where it has the largest household penetration and where it has difficulty finding the largest number of subscribers.
Netflix lost 640,000 subscribers in the U.S. and Canada in the last quarter, prompting management to note that most of its future growth will come from international markets. Netflix ended in March with 74.6 million subscribers in the United States and Canada.
Source: Huffpost
