Advanced Television

Netflix: 200k subs down; mulls advertising

April 20, 2022

By Chris Forrester

Netflix reported a net loss of 200,000 subscribers during its January-March Q1/2022 trading period (compared with Q4/2021) and admitted that there might be worse to come during this current quarter. The loss is the first in more than 10 years of subscriber growth and prompted a 25.73 per cent crash in the company’s share price. Netflix had expected growth of 2.5 million new subscribers.

The company admitted that it is now harder to maintain growth and with tougher competition from rival streaming services. Also not helping was the 700,000 switched off in Russia as a result of the Ukraine conflict. Netflix told analysts in a post-results call that it could lose 2 million subscribers this quarter.

Netflix stated: “Covid clouded the picture by significantly increasing our growth in 2020, leading us to believe that most of our slowing growth in 2021 was due to the Covid pull forward.” Netflix ended the quarter with about 221.6 million subscribers, still a massive number and the largest streaming audience on the planet.

In terms of hard cash, its revenue climbed 10 per cent from last year to nearly $7.9 billion (€7.3bn).

Reed Hastings, co-CEO, told analysts that it was targeting the 100 million non-subscribing viewers who were watching thanks to password sharing, commenting: “They love the service. We just got to get paid at some degree for them.”

Hastings said that Netflix was also looking closely at launching an ad-supported service.

“We’re trying to figure out [the plan] over the next year or two. But think of us as quite open to offering even lower prices with advertising as a consumer choice. Hulu, Disney is doing it. HBO did it. So, if you still want the ad-free option, you’ll be able to have that as a consumer. And if you would rather pay a lower price and you’re ad-tolerant, that’s also – we’re going to cater to you also,” explained Hastings.

Spencer Neumann (CFO) said the Ukraine conflict was affecting subscribers elsewhere in Central and Eastern Europe.

The Netflix team also addressed gaming, and live sport. Ted Sarandos (co-CEO) said: “I’m really happy with what the team has built, a big capacity to be able to provide our members with interactive and gaming experiences and building on its success with documentaries such as Formula 1:Drive to Survive. “We’ve grown [F1] tremendously. We’re taking that bet in the world of tennis and golf and others coming up. And we also have an incredible sports documentary business that keeps growing. So, I’m not saying we never would do sports, but we would have to see a path to growing a big revenue stream and a big profit stream with it.”

Shares shed a quarter in pre-market trading and were braced for worse when exchange opens after the Easter break.

Never a true believer – read Nick Snow’s summer 2021 blog on Netflix.

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