Netflix Shares Drop As Company Searches for Solutions

Image Provided by Bloomberg

by Sam Leon / April 25, 2022

According to the Wall Street Journal, Netflix shares fell 35% Wednesday hitting its lowest point since 2018. The streaming company has already lost 200,000 subscribers and expects to lose two million by the end of June. It is Netflix first time losing subscribers in over a decade. Factors like increased competition, suspended service in Russia, and actions towards discouraging password-sharing contributed to the drop. 

The company’s slowing growth prompted them to take actions to counter it. In January, Netflix raised its subscription prices in the United States and Canada. In March, Netflix announced it would be charging users an extra fee for sharing their account password outside of their household. Two extra “sub-accounts” would cost an additional three dollars a month. Viewers would also have to verify accounts through an email or a text. The company began testing its new subscription plan in Costa Rica, Chile, and Peru.

On Tuesday, Netflix acknowledged password-sharing was a big issue. Over 222 million consumers have their own Netflix subscriptions and 100 million households use the subscriptions of those consumers.

Netflix is exploring other ways to improve its losses. 

Although the company is known for being ad-free, it is considering using ads. Users would have a new option to pay for a free, ad-supported plan. Netflix also wants to add fewer new titles so they can focus on its production quality. This would prioritize shows with the most return. The budget for new shows is expected to decrease by at least 25 percent. 

Documentaries and unscripted content will also be increased since they are cheaper to produce. Shows may also have a reduced number of episodes in their second and third seasons. 

The slowed subscriber growth for the company will change its cost as it continues to lose consumers.

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