The company’s shares plunged more than 27% in premarket trading after the news.
Netflix has hinted at its problems before, and even though last year in the first quarter Netflix reported a surge of nearly 4 million users, we are now more likely to see a surge of around 2.5 million.
We can clearly say that last year’s surge was fueled by the Covid-19 pandemic, and it’s certainly true. However, it doesn’t change the fact that this is the first drop in users since 2011.
Netflix logo on a website with stock market
What is to blame for this decline?
One factor is the competition, which is gradually pulling some users to its side. Among the biggest competitors, we can count HBO, which is undergoing major changes and now operates under the newly formed company Warner Bros. Discovery. We informed you about this merger in an earlier article.
Another big competitor is undoubtedly Disney+, which is available in more than 50 countries/regions and still has a lot of space to expand. In addition, Disney+ has a large number of brands under its wing that are clear draws, including Disney, Pixar, Marvel, Star Wars, National Geographic, and others.
It’s not just about competition
Netflix has another problem it has warned about. This problem is related to shared access. In short, a large number of users are people who don’t pay for the service but have a shared password with someone who does pay for the service. And that number is not small at all. The company estimates that in addition to its 222 million paying households, more than 100 million more households share access through account sharing. It warned that there could be a global crackdown.
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So we’ll see if Netflix takes any steps to prevent this from happening, and then how it subsequently affects user growth.
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