Here’s a somewhat surprising development, but ever since Netflix started its online streaming service, it has been in a state of constantly growing. Yet, for the first time in over ten years, the streaming giant faced a stark drop in its shares by 20% after losing 200K subscribers in the first quarter of 2022. That’s not all, as they suspect another drop in the next quarter as large as 2 million at this rate.
The cause for this development is mostly associated with two key factors. On the one hand, the recent increase in costs due to the ever-growing amount of originals being added to the project has swayed customers away from their subscriptions. As competition continues to grow in the market, it seemingly backfired on them in the short term but hope to see it work out in the long term. It may be the first hint at a potential shift for the company to embrace an ad-supported model moving forward to counteract the price increase.
On the other, there’s also the big move to pull out of Russia due to the recent event involving Ukraine. Naturally, that also left an impact on its subscriber basis moving forward. Once things potentially calm down and they can once again one, the question remains if they can get those subscribers back. Vladimir Putin‘s answer to companies pulling from the country came in the form of allowing legal piracy, which could hurt releases in the country.
While some are seeing this as an end of an era, there was always going to be a point where they won’t manage to consistently grow as the market potentially saturates with new competition. Of course, losing 20% of your stock is going to hurt and the bigger question remains if the streaming market will start cannibalizing itself moving forward. As of right now, we’ll have to see if they see a continued loss going through 2022. Whatever the future holds, it’s certainly a rough start to the year for the company.
Source: CNBC
