Shares in Netflix plummeted by 25% in after-hours trading on Tuesday after it was revealed that the streaming brand had suffered its first fall in subscriber figures in a decade. Netflix’s quarterly report showed that there was a loss of 200,000 subscribers which was enough to trigger a mass sell-off on Wall Street.
There were many alleged reasons behind the exodus of subscribers. Key amongst these reasons was the increased competition within the streaming market, although Netflix was also quick to highlight the problems of password sharing and inflation.
The streaming giant also suggested that Russia’s invasion of Ukraine could also be a factor in the disappointing subscriber numbers. This is because there was a winding down of Russian-paid memberships that cost 700,000 subscribers.
Netflix has certainly faced a much harder task in maintaining its dominance of the streaming market. Rival brands like Amazon Prime, Disney+ and Apple TV+ have upgraded their products in recent months, and the renewed competition has been enough to cause Netflix to predict that there will be a further drop in subscribers for the current quarter.
Such is the concern over Netflix that several other streaming platforms have seen their share price fall. Brands like Disney, Warner Bros, Roku, Paramount and Discovery were dropped by investors ahead of their next quarterly earnings reports.
The fact that Netflix was predicting the loss of a further two million subscribers is all the more alarming due to the fact that the brand hasn’t seen negative subscriber figures in over a decade. With a significant decrease in revenue growth, Netflix is said to be considering introducing new lower pricing tiers that could feature advertising – something that the streaming brand has been keen to avoid so far.
Netflix will also increase its efforts to tackle password sharing that is thought to be a problem in over 100 million households across the world. The brand said that it previously ignored password sharing but warned that it would be implementing a crackdown that would force any wrongdoers to pay up.
Such a move would be a marked difference to the previous mood where Netflix seemed to be keen to get as many people as possible to use the streaming platform. But with increased competition damaging the Netflix stock price, it has found itself with no option but to react in this way.
Positive news elsewhere on the markets
Thankfully, Netflix’s problems don’t appear to have affected the rest of the market. Tuesday saw another strong session on Wall Street where several major tech stocks shrugged off the current concerns about another hike in interest rates.
Futures on the Dow Jones Industrial Average were up 126 points and there were further rises in futures on the S&P 500 and Nasdaq. While streaming giants suffered a torrid day on the markets, elsewhere market heavyweights like Procter & Gamble and IBM saw their stock price rise by 1% following better than expected quarterly results.