As part of its quarterly earnings report, Netflix revealed that it lost 200,000 subscribers in the first quarter of 2022.
Netflix now has 221.64 million global subscribers, and the firm earned a net income of $1.6 billion on revenues of $7.8 billion in the quarter. Revenues were up 9.8 percent, but the quarter was also the first in which growth fell below double digits.
“Our revenue growth has slowed considerably as our results and forecast below show,” a Netflix letter to shareholders begins. “Streaming is winning over linear, as we predicted, and Netflix titles are very popular globally. However, our relatively high household penetration—when including the large number of households sharing accounts—combined with competition, is creating revenue growth headwinds.”
According to Netflix, the service got an unexpected boost from the COVID-19 pandemic, which “obscured the picture until recently.” The firm says it will try to reaccelerate revenue growth through service improvements and more effective monetization of multi-household sharing, meaning that it will no longer let families share a single account for free.
Increased competition has taken a toll, too. While Netflix has the single best content library by far, YouTube, Amazon, and Hulu have maintained their market positions, and Disney has almost doubled its share—granted, to just 1.7 percent of total U.S.-based viewing time—in the past year.
“Key to our success has been our ability to create amazing entertainment from all around the world, present it in highly personalized ways, and win more viewing than our competitors,” the letter explains. “These are Netflix’s core strengths and competitive advantages. Together with our strong profitability, we believe we have the foundation from which we can both significantly improve, and better monetize, our service longer term.”