Netflix says it lost 200,000 subscribers in the first part of the year

Global streaming giant Netflix on Tuesday reported a subscriber loss for the first time in more than a decade and predicted a more contraction in the second quarter, a rare omission for a company that The company used to be a reliable growth engine for investors.

Netflix lost 200,000 subscribers in its first quarter, short of the modest prediction it would add 2.5 million subscribers. In early March, the decision to suspend operations in Russia after the invasion of Ukraine left 700,000 members missing.

Netflix, which now has 221.6 million subscribers, last reported a customer loss in October 2011. Netflix gave a dismal forecast for the spring quarter, forecasting a loss of 2 million subscribers. sign, despite the return of highly anticipated series like “Stranger Things” and “Ozark” and the debut of the movie “The Gray Man,” starring Chris Evans and Ryan Gosling. Wall Street has a 227 million target for Q2, according to Refinitiv data.

First-quarter revenue rose 10% to $7.87 billion, slightly below Wall Street’s forecast of $7.93 billion. It reported net income per share of $3.53.

“The large number of households sharing accounts – combined with competition, is creating headwinds in terms of revenue growth. The massive COVID surge for streaming has clouded the picture until recently,” said Netflix, explaining the difficulties of signing up new customers.

The world’s dominant streaming service is expected to report slowing growth, amid stiff competition from long-standing rivals like Amazon.comTraditional media companies like Walt Disney Co and Warner Bros Discovery Inc startups and big money startups like Apple Inc.

According to researcher Ampere Analysis, streaming services spent $50 billion on new content last year to attract or retain subscribers. That’s a 50% increase from 2019, when more new streaming services launched, signaling a rapid escalation of the so-called “streaming wars”.

As growth slows in mature markets like the United States, Netflix is ​​increasingly focusing on other regions of the world and investing in local-language content.

“While hundreds of millions of homes pay for Netflix, more than half of the world’s broadband homes are unpaid – demonstrating huge growth potential in the future,” the company said in a statement. ” said the company.

Wedbush analyst Michael Pachter said Netflix has been able to raise subscription prices in the US, UK and Ireland, to fund content production and growth in other parts of the world, for example. like Asia. However, the incentive to sign up in these growth markets is lower.

Benchmark analyst Matthew Harrigan warned that the global economy is unlikely to be “capable of emerging like an albatross” for membership growth and the likelihood that Netflix will continue to raise prices as competition intensifies.

Streaming services aren’t the only form of entertainment vying for consumers’ time. The latest Digital Media Trends survey from Deloitte, published in late March, shows that Generation Z, 14 to 25 year old consumers, spend more time playing games than they do. watch movies, TV at home or even listen to music.

The majority of Generation Z and Millennial consumers polled said they spend more time watching user-generated videos like on TikTok and YouTube than watching movies or shows on streaming services.

Netflix, sensing a shift in consumers’ entertainment habits, has begun investing in the gaming sector, but it has yet to make a material contribution to the company’s revenue.

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