Netflix is an American subscription streaming service and production entity, headquartered in Los Gatos and California. This expensive OTT platform faced its first subscriber loss after above 10 years of its launch. The subscriber loss resulted in a 25% decline in its shares in extended trading. As per its quarterly earnings report, the company’s customer base has been reduced to 2,00,000 subscribers during the January-March span.
The company shares will have diminished more than half of their value till now, if the stock decline stretches into Wednesday’s regular trading bout, annihilating about $150 billion in shareholder wealth in less than 4 months. Netflix will work on creating a lower-priced ad-supported version of the service over the next couple of years. The company also estimates there are more than 100 million people enjoying the service without paying for the platform.
Since failing to benefit from 8,00,000 subscribers in 2011, the company assimilated its huge setback because of spilled plans to begin charging one by one for its then-advancing service, which had been rolled up at free-of-cost with its customary DVD-by-mail service. The recent subscriber loss is worse than the Netflix management prognosis for an understated benefit of 2.5 million subscribers.
The reverse of fortune which has been received by the company follows its inclusion of 18.2 million subscribers in the previous year, its feeble annual growth in 5 years. This is at odds with an increase of 36 million subscribers during 2020 when people were kettled at home and emaciated for entertainment, which Netflix was capable of offering its stockpile and original programming rapidly and effortlessly.
In a video conference, the CEO of Netflix, Reed Hastings said that the company has earlier forecasted that it will get its momentum back, but the recent issues of decline in shares have hindered it. Covid is the reason for a lot of noise on how to devour the situation. He also assured that the company will begin suppressing the sharing of subscriber passwords that have allowed households to use its service from a sole account, with alterations seeming to initiate in 2023.