The streaming behemoth reported it dropped 200,000 subscribers in the first three months of the year and it expects to lose another 2 million in the current quarter. The loss is despite a string of high-profile premieres in that same period, including Bridgerton season two and Stranger Things season four.It’s a dire result for Netflix who has been on a consistent growth trajectory for a decade and points to larger problems for streaming companies in general. Netflix’s stock price has fallen more than 40 per cent this year. It currently has 222 million paid subscribers.The surprising loss in subscribers – Wall Street investors had expected Netflix would add 2.5 million accounts for the first quarter – is largely due to a 640,000 subscriber decline in North America, a mature streaming market that has reached saturation thanks in part to an explosion of services that also includes Disney+, HBO Max and Peacock.Netflix also lost 700,000 subscribers in Russia, where it suspended accounts as part of a wave of international companies ceasing its operations there.The only region in which Netflix saw growth was in Asia, where it added million-plus accounts. The bright spot in Asia could see Netflix doubling down on its expansion into non-English language series and movies as the company chases new customers outside of its home turf.The subscriber loss also looks likely to force Netflix to change its revenue growth strategy.The company highlighted two areas in which it may find ways to make more money. One is the potential introduction of a cheaper ad-supported tier, similar to options already in place at rival American streamers Hulu and Paramount+.On the ad-supported model, Netflix co-chief executive Reed Hastings said: “Those who have followed Netflix know that I have been against the complexity of advertising and a big fan of the simplicity of subscription. “But as much as I’m a fan of that, I’m a bigger fan of consumer choice and allowing consumers who would like to have a lower price, and are advertising tolerant, get what they want makes a lot of sense. Think of us as quite open to offering even lower prices with advertising as a consumer choice.”Ents top contentThe other tactic Netflix pointed to is a crackdown on password sharing, a practice that involves subscribers sharing account access to friends or family outside of their household, which is against the terms and conditions.Netflix revealed 100 million accounts share their passwords outside of their household, with 30 million of those subscribers in North America.It has previously hinted at a crackdown on password sharing but the challenge would be how many viewers who are currently mooching off someone else’s account would be motivated enough to pay for their own, versus the churn of subscribers who may cancel their accounts if Netflix took a hard line on sharing.Netflix started testing a feature in March in Chile, Costa Rica and Peru which gave customers the option of paying an extra fee to include two extra profiles outside of the household. The limited trial as well as spotlighting how widespread password sharing is suggests Netflix will make a move against the practice.Reed said on an investor call: “There are already over 100 million households that are already choosing to view the service. They love the service, we have just got to get paid at some degree for them.Netflix’s chief financial officer Spencer Neumann also said the company will be “pulling back” on its spending on content over the next two years. It was expected to spend $US19 billion on content in 2022.In a note to investors, Netflix blamed its loss of subscribers on a number of factors.It said: “Our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds.”
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