Netflix loses subscribers after leaving Russia

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For the first time in a decade, Netflix said on Tuesday, the streaming service lost more paying customers than it added after a net drop of 200,000 subscribers it attributed to its withdrawal from Russia.

While revenue grew, the announcement pushed the stock price down more than 20 percent in after-hours trading. In a letter to shareholders, Netflix attributed the net loss for the January-March period to its decision last month to suspend services in Russia in protest at the Kremlin’s February 24 invasion of Ukraine.

It lost 700,000 spectators in Russia, although it added 500,000 elsewhere in the world.

The drop comes amid a larger trend of declining viewership, with the streaming service projecting it will lose an additional 2 million subscribers in the next three-month quarter ending in June.

He added that revenue would grow to nearly $8 billion in that period, up 10% from the same period last year. The company also maintains a paying audience of more than 220 million, more than double what it had five years ago.

But the unexpected drop in paying viewers — the company had said in January it expected an increase of 2.5 million paying customers — reflects a steady slowdown in business. The company cited increased competition and the failure of the pandemic-triggered growth in paying viewers, which has driven more people to home entertainment options.

To deal with the slump, Netflix said it would seek to monetize the millions of delinquent viewers who have benefited from account sharing. The company estimates that 100 million households, including more than 30 million in the United States and Canada, are sharing accounts.

“[Account sharing]It’s not a new thing,” said Reed Hastings, Netflix’s co-chief executive, speaking to investors via video. “We are working on how to monetize sharing,” he said. “Remember, 100 million households are already choosing to watch Netflix. They love the service. We just have to pay.”

The company is experimenting with two paid-sharing features in Chile, Costa Rica and Peru that aim to persuade existing account participants to start paying small amounts of up to $3.

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Hastings also recognized strong competition. “We have great competition. They have some really good shows and movies,” he said without naming rivals or movies. “What we have to do is step up a little bit.” In its letter, Netflix listed Disney Plus as one of the “traditional entertainment companies” to realize that “streaming is the future”.

Longer term, Netflix said it sees growth coming mainly from outside the United States. It will focus on producing content that “can be made anywhere and loved everywhere,” Netflix said, pointing to non-English-language hits produced outside the United States, such as South Korea’s “Squid Game” and “All of Us Are Dead” and The “Money Assault” from Spain.

The company reported $1.6 billion in net income during the January-March period, up from the $607 million reported in the October-December 2021 quarter, but down approximately 6% from the first quarter of the year. past. Its revenue was nearly $7.9 billion, up 10% from the same period last year.

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