Popular streaming service Netflix projected to stockholders they would gain 2.5 million subscribers through the first quarter of 2022.
Instead, the media giant lost 200,000.
And while it marks the first quarterly subscriber loss in over a decade, projections say it may only be the first of several upcoming disappointments for a company that changed the entertainment industry.
In their defense, Netflix pointed to inflation cutting into customers’ available entertainment dollars as well as their suspension of service in Russia after that country’s invasion of neighboring Ukraine, which took about 700,000 subscribers from Netflix’s audience.
The stock market though still responded poorly to the news as Netflix’s stock fell about 26% on Tuesday, knocking about $40 billion off the company’s value.
In all, the company has been devalued by about 50% since January, a development that has left Netflix mulling offering a cheaper tier to subscribers that is bolstered by advertisements.
“Those who have followed Netflix know that I've been against the complexity of advertising, and a big fan of the simplicity of subscription,” Netflix CEO Reed Hastings said in a statement. “But, as much as I'm a fan of that, I'm a bigger fan of consumer choice.”
Hastings pointed to successful, lower-priced subscription options made available by services like Disney Plus and HBO Max that include ads.
As it stands, Netflix is projecting another 2 million subscribers will bolt in the second quarter of 2022, even as popular series like “Ozark” and “Stranger Things” make their long-awaited returns.
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