Tech News

Netflix subscribers fell for the first time in a decade and shares plunged as much as 24%

The global streaming giant Netflix on Tuesday reported a loss of subscribers for the first time in more than a decade and predicted further contraction in the second quarter, a rare setback for a company that has been a reliable growth engine for investors.

[article_mb_code]

Netflix lost 200,000 subscribers in its first quarterfalling well short of its modest predictions that it would add 2.5 million subscribers, and its stock was down 23% on Wall Street in after-hours trading.

The streaming giant explained that this decrease is mainly due to the difficulty of obtaining new subscribers around the worldand also to the suspension of service in Russia.

[article_mb_code]

The industry pioneer saw strong growth during the pandemic. The market expected a correction, but not as strong.

“The suspension of our service in Russia and the progressive decline in the number of Russian paid subscribers led to a net loss of 700,000 subscriptions. Without this impact, we would have had an additional 500,000 subscribers” over the last quarter of 2021, the company said in a statement.

[article_mb_code]

In addition, this week the official Russian agency TASS reported that Russian users have sued Netflix for 60 million rubles (733,772 dollars or 677,071 euros) for the suspension of its services in the country. The class action lawsuit was filed in Moscow’s Khamovnicheski court, lawyer Konstantin Lukoyánov told the agency.

”Today we filed a class action lawsuit against the American Netflix service before the Moscow Jamovnicheski District Court. The lawsuit is based on the violation of the rights of Russian users in connection with Netflix’s unilateral refusal to provide services in Russia,” he said.

In addition to the Russian invasion of Ukraine, Netflix explained that “the sheer number of households sharing accounts, combined with competition, is creating headwinds to the upside in revenue.”in relation to the difficulties to attract new clients.

[article_mb_code]

The firm invoiced 7,900 million dollars in the first quarter of the year, 10% more than a year ago in the same periodin particular thanks to the increase in the number of subscribers in 12 months (+6.7%) and an increase in rates.

The net profit was located in both $1.6 billion, down from $1.7 billion in the first quarter of 2021.

Netflix’s poor results hit other video-related stocks like Roku ROKU.O, which fell more than 6%; Walt Disney DIS.N, almost 4% and Warner Bros Discovery WBD.O, 2%.

Streaming services spent $50 billion in new content last year, in an attempt to attract or retain subscribers, according to researcher Ampere Analysis. This represents an increase of 50% compared to 2019.

To the extent that growth slows in mature markets like the US, Netflix increasingly focuses on other parts of the world and invest in content in local languages.

With information from Ruters and AFP

Keep reading:

Tags
Back to top button