Home News Netflix could cut prices after losing hundreds of thousands of subscribers and...

Netflix could cut prices after losing hundreds of thousands of subscribers and shares fell 26%


The company said it lost 200,000 subscribers in its first quarter, well below its expectations of adding 2.5 million subscribers, writes Reuters.

On the other hand, the value of its shares on Wall Street fell by 26%, leading to a loss of about $ 40 billion in stock market value. Since the company warned in January about a weak increase in subscribers, the company has lost almost half of its value.

Delayed subscriber growth has led Netflix to consider offering a lower-priced version of the advertising service, citing the success of similar offers from rivals HBO Max and Disney +.

“Netflix fans know I was against the complexity of the commercial and I’m a big fan of the simplicity of the subscription,” said Netflix CEO Reed Hastings.

Netflix has provided a grim forecast for the second quarter, predicting that it will lose 2 million subscribers, despite the return of long-awaited series such as “Stranger Things” and “Ozark” and the debut of “The Gray Man” starring Chris Evans in main role. and Ryan Gosling. Wall Street targeted 227 million for the second quarter, according to Refinitiv data.

Netflix’s poor performance also affected the shares of other video streaming companies – Roku fell by more than 6%, Walt Disney by 3% and Warner Bros Discovery by 2%.

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First-quarter revenue rose 10 percent to $ 7.87 billion, slightly below Wall Street’s $ 7.93 billion forecast. A net earnings per share of $ 3.53 were reported, exceeding expectations on Wall Street of $ 2.89. “The large number of households that share accounts, combined with the competition, creates a current that stops the growth of incomes. The big push for the pandemic streaming industry has hidden this bleak picture until recently, “he said.

In addition to paying households, Netflix is ​​watched in another 100 million households, which the company says have joint accounts, including 30 million in the United States and Canada. As market development has increased, the number of shared accounts has become a bigger issue.

The world’s leading streaming service is expected to report slowing growth amid strong competition from well-known rivals such as Amazon.com, traditional media companies such as Walt Disney and the newly established Warner Bros. Discovery, and new ones. come with financial capital, such as Apple Inc.

Last year, streaming services spent $ 50 billion on new content in an attempt to attract or retain subscribers, according to Ampere Analysis. This means a 50% increase over 2019, when many of the new streaming services were launched, signaling the rapid escalation of so-called “streaming wars”.

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Netflix has noted that despite growing competition, its share of TV viewing in the United States has remained constant.

“We want to increase this rate faster,” the company said.

As growth slows in mature markets such as the United States, Netflix is ​​increasingly focusing on other parts of the world and investing in local content.

“While hundreds of millions of households are paying for Netflix in the world, more than half of the homes that could be subscribed have not yet done so, but they represent a huge potential for growth in the future,” the company said. in a statement.

Netflix has managed to raise subscription prices in the United States, the United Kingdom and Ireland to fund content production and growth in other parts of the world, such as Asia, noted Wedbush analyst Michael Pachter. However, subscription prices in these growing markets are lower.

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