Netflix has lost a significant amount of paying customers in the first quarter of 2022, the company announced Tuesday. The streaming service has identified a problem with password sharing and will take appropriate action.
Netflix is usually well-versed in numbers, but for the first quarter of 2022, the streaming service has issued a negative announcement that the subscribers are reducing. According to reports, Netflix lost 200,000 subscribers in the first three months of the year, but this figure is expected to rise in the coming months.
The reason for this, according to the streaming service, is an old problem that must now be resolved permanently: password sharing.
According to a Netflix estimate, over 100 million households worldwide use shared passwords to access its content, with over 30 million of these households located in the United States and Canada. The estimate was released alongside the company’s plans to implement more effective monetization of multi-household sharing. The platform’s subscriber base in the United States and Canada fell from 75.2 million in Q4 2021 to 74.5 million in Q1 2022.
The quarterly shareholder letter also admitted that the company’s decision to ignore password sharing for so long likely fueled the video-streaming service’s growth. The company, on the other hand, now wants the account holders who supply the freeloaders to pay for the service they’re using.
Netflix previously calculated that a new test campaign for legally shared passwords could generate an additional profit of around $1.66 billion dollars.
For many years, Netflix was regarded as the original disruptor in the entertainment industry. Its entry into the field prompted every major Hollywood studio to implement a streaming strategy in order to compete with Netflix’s bingeable, no-advertising revolution.
With new entrants such as Disney+ and HBO Max offering compelling services, the company may be forced to adopt some of the revenue streams that have made traditional media companies successful for decades: theatrical distribution, ad-supported subscription services, and possibly consumer products.