Global streaming giant Netflix Inc. reported on Tuesday that it lost subscribers for the first time in more than a decade and forecast further contraction in the second quarter, a rare failure for a company that has been a reliable growth engine for investors.
Netflix lost 200,000 subscribers in its first quarter, well short of its modest predictions that it would add 2.5 million subscribers. His decision in early March to suspend service in Russia after it invaded Ukraine resulted in the loss of 700,000 members. The company’s shares plunged 20 percent in the secondary market.
Netflix, which currently has 221.6 million subscribers, last reported a loss of customers in October 2011. Netflix offered a gloomy prediction for the spring quarter, forecasting that it would lose two million subscribers, despite the return of series. as expected as Strange things Y Ozarks and the debut of the movie the gray manstarring Chris Evans and Ryan Gosling.
Revenue rose 10 percent to $7.87 billion, but investor focus remained on the shrinking customer base.
“The sheer number of households sharing accounts, combined with competition, is creating obstacles to revenue growth. COVID’s big push to streaming darkened the picture until recently,” Netflix said, explaining the difficulties of signing up new customers.
Streaming competition heats up
The world’s dominant streaming service was expected to see slowing growth amid intense competition from established rivals like Amazon.com, traditional media companies like Walt Disney Co. and the newly formed Warner Bros. Discovery Inc. and newcomers like Apple. Inc.
Streaming services spent $50 billion on new content last year, in a bid to attract or retain subscribers, according to researcher Ampere Analysis. That’s a 50 percent increase from 2019, when many of the newer streaming services launched, indicating the rapid escalation of so-called “streaming wars.”
As growth slows in mature markets like the United States, Netflix is increasingly targeting other parts of the world and investing in local language content.
“While hundreds of millions of households pay for Netflix, more than half of the world’s broadband households still do not, which represents enormous potential for future growth,” the company said in a statement.
Netflix has been able to raise subscription prices in the United States, the United Kingdom and Ireland to finance content production and growth in other parts of the world, such as Asia, said Wedbush analyst Michael Pachter. However, subscription prices in these growing markets are lower.
Benchmark analyst Matthew Harrigan warned that the uncertain global economy “may emerge as a drag” on membership growth and Netflix’s ability to continue raising prices as competition intensifies.
Streaming services aren’t the only form of entertainment competing for consumers’ time. Deloitte’s latest Digital Media Trends survey, published at the end of March, revealed that Gen Z, those consumers aged 14 to 25, spend more time playing games than watching movies or TV series at home, or even listening to music.
The majority of Gen Z and millennial consumers surveyed said they spend more time watching user-created videos like those on TikTok and YouTube than they do watching movies or shows on a streaming service.
Netflix, recognizing the change in consumer entertainment habits, has started to invest in games, but has yet to contribute materially to the company’s revenue.
Reference-www.cbc.ca