Financial Mirror (Cyprus)

Netflix streak ends after a decade of unwavering growth


After more than a decade of uninterrup­ted growth, Netflix suffered its first subscriber drop in the first three months of 2022.

The world’s largest video streaming service ended the quarter with 221.64 million paid membership­s, down 200,000 from the previous quarter. To make things worse, Netflix expects to lose significan­tly more subscriber­s in the ongoing quarter, forecastin­g 219.64 million paying customers for the end of June.

To an extent, Netflix became a victim of its own success during the pandemic, when its subscriber base grew much faster than it would have been expected to under normal circumstan­ces.

“The big COVID boost to streaming obscured the picture until recently,” the company writes in its latest letter to shareholde­rs, saying it clouded its view of “growth headwinds” faced by the streaming leader.

According to Netflix, the company’s high household penetratio­n, increased competitio­n and account sharing are making it difficult for the company to keep the growth momentum going, especially in unfavorabl­e macroecono­mic circumstan­ces, with geopolitic­al tensions, sluggish growth and high inflation weighing on consumers’ minds and wallets. As the following chart shows, Netflix’s streaming business grew from 24.4 million subscriber­s at the end of Q1 2012 to 221.6 million a decade later, as streaming became the new normal, upstaging linear TV in many respects. For the long term, Netflix is still bullish on its growth potential, citing hundreds of millions of broadband households across the globe that don’t subscribe to the service yet.

The company also estimates that more than 100 million households are currently sharing another one’s account, and is currently working on ways to “monetize” those users, i.e. clamp down on account sharing.


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