Netflix lost 200,000 subscribers during the first quarter of the year, according to the streamer’s earnings report Tuesday. That number is well below the company’s estimated 2.5 million additions for the quarter.
Among the reasons for declining numbers for the quarter, Netflix included password sharing, an issue the service has been trying to fight against over time. Recently, Netflix began testing a new way of cutting down on password sharing – setting up a pricing structure for additional users on an account. With a third of Netflix users admitting to password sharing, it’s not surprising it’s taking a toll on the company’s financials.
“Our revenue growth has slowed considerably as our results and forecast below show,” a note on the letter to shareholders says. “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.”
Netflix estimates that the service is being shared with over 100 million households, in addition to the 222 million paying households.
Also causing a dip in revenue and subscriber growth is the natural drop after a surge in subscriptions and time spent on at-home entertainment during the pandemic.
“The big COVID boost to streaming obscured the picture until recently. While we work to reaccelerate our revenue growth – through
improvements to our service and more effective monetization of multi-household sharing – we’ll be holding our operating margin at around 20%. 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.”