What happened to the growth of the subscriber base of the streaming service Netflix?
Streaming service Netflix Inc. (NFLX) has published a report for the first quarter to report the results of the first quarter of 2022. In it, the company reported a decrease in the number of subscribers for the first time in ten years, and many media replicated this news, calling the event “shocking”.
Does Netflix have a serious problem? The report focuses on the number of Netflix users, which has decreased by about 200 thousand. A huge number of comments and news with extreme opinions like “the decline of the popularity of the streaming service” against this figure led to a strong drop in NFLX quotes. However, the weak dynamics of the subscriber base .
Now is the stage of a difficult comparison with the uniquely influential figures of the past two years, when people spent a lot of time at home because of the pandemic. In addition, the COVID-19 crisis has led to the freezing of production of many shows, and Netflix has a gap in filling the service with new content. An additional factor was the loss of 700 thousand subscribers from Russia.
The streaming video market in the United States is close to saturation — approximately 75 million Netflix users make up 60% of households. Against this background, it was difficult for Netflix to maintain a strong dynamic, especially expected on Wall Street: with an increase in the audience of about 2.5 million subscribers in the current quarter. But as a result, Netflix may lose even more subscribers in the second quarter.
In the first quarter, Netflix could increase revenue to $7.87 billion, compared with $7.16 billion a year earlier. Earnings per share decreased to $3.53 ($3.75 in Q1 2021). Netflix has enough funds to continue producing content and launching new projects. It will take time and successful advertising of new films and TV series to restore the audience. Since Netflix is a leading producer of content for Internet TV, the company solves these problems.
