Netflix loses subscribers for first time in a decade, with company braced for further losses

Netflix has lost subscribers globally for the first time since October 2011.

Announcing its Q1 2022 results, the streaming leader revealed that it had lost 200,000 subscribers in the quarter. 

While the figure is initially shocking given Netflix’s historic upwards momentum, it is worth factoring in the decision to suspend its service in Russia last month in response to the Kremlin’s invasion of neighbouring Ukraine – a move also taken by Disney. This resulted in 700,000 users immediately dropping off Netflix’s subscriber count. 

That being said, without the loss of Russian users, Netflix would have been significantly off its Q1 target of 2.5 million additions. Excluding Russia, Netflix added 400,000 subscribers in EMEA, levelled out by an inverse addition in LATAM of the same figure. The US and Canada lost 600,000 subscribers.

Netflix still remains the largest SVOD operator in the world, and has a global total of 221.6 million subscribers. 

The streamer is similarly pessimistic about Q2, predicting it will lose a further 2 million subscribers by the end of the half year. This is despite the return of bankable favourite series such as Stranger Things, The Umbrella Academy and Ozark.

However in spite of the losses, co-CEOs Ted Sarrandos and Reed Hastings in their shareholder letter described Netflix’s customer retention as “best in the industry” and said that its focus for membership growth is “continued soft acquisition across all regions.”

While subscriber numbers dropped, revenue for the quarter grew by 10% to US$7.87 billion – though this is US$60,000 shy of Wall Street forecasts. 

The results release led Netflix’s shares to immediately drop by more than 25%, while the company’s position as a barometer for the industry as a whole also meant that related stocks also tumbled. Roku, Disney and Warner Bros. Discovery shares were down by 6%, 3% and 2% respectively following Netflix’s earnings release.

Sharing in the spotlight

The main villain of the piece from Netflix’s perspective is made clear in the shareholder letter: account sharing. 

The letter makes a dozen references to the practice of multiple households sharing one account, describing it as a barrier to growth. It said: “ In addition to our 222m paying households, we estimate that Netflix is being shared with over 100m additional households, including over 30m in the UCAN region. Account sharing as a percentage of our paying membership hasn’t changed much over the years, but, coupled with the first factor, means it’s harder to grow membership in many markets – an issue that was obscured by our COVID growth.”


The days of largely unregulated account sharing appear to be coming to a close, with the company saying that a key focus for it going forward is how to monetise the practice of account sharing, taking aim at users who abuse the practice. 

“Sharing likely helped fuel our growth by getting more people using and enjoying Netflix,” the letter said. “And we’ve always tried to make sharing within a member’s household easy, with features like profiles and multiple streams. While these have been very popular, they’ve created confusion about when and how Netflix can be shared with other households.”

The company earlier this year launched two new paid sharing features in Latin America – historically a testing ground for the company – where users can pay to add additional households to their accounts at an extra cost. 

It added: “So while we won’t be able to monetise all of it right now, we believe it’s a large short- to mid-term opportunity. As we work to monetize sharing, growth in ARM, revenue and viewing will become more important indicators of our success than membership growth.”

International focus and reaccelerating growth 

As evidenced by Netflix’s consecutive quarters of North American losses, the company stated that most of its growth “over the longer term” will come from outside the US. 

The company highlighted the popularity of its content produced in non-English speaking markets such as South Korea and Spain with hits including Squid Game

It said that Netflix will continue to invest in international content production in order to assist in its growth outside of the North American market, with the company “working to extend our lead in this area.”

Don’t Look Up

Looking ahead, Netflix stated: “Our plan is to reaccelerate our viewing and revenue growth by continuing to improve all aspects of Netflix – in particular the quality of our programming and recommendations, which is what our members value most. 

“On the content side, we’re doubling down on story development and creative excellence, which we see reflected in big Q1’22 TV hits like Bridgerton (627 million hours viewed for season 2, our 1 biggest English language series in our history) and Inventing Anna (512m hours viewed) – both from our extremely successful partnership with Shonda Rhimes – and films like Tinder Swindler (166m hours viewed, our biggest documentary film ever released) and The Adam Project (233m hours viewed), which come on the back of our Q4 hits Red Notice and Don’t Look Up.”

Crucially at a time when competitors including HBO Max, Disney+ and Paramount+ all have added advertising-supported products, Netflix has been the the outlier in refusing to offer a cheaper, ad-supported tier. While the letter does not make reference to an AVOD version of Netflix, Hastings said, during a video interview posted afterwards, that it will succumb to the trend within a couple of years. 

He said: “It’s pretty clear that it’s working for Hulu, Disney’s doing it, HBO did it. I don’t think we have a lot of doubt that it works. All those companies have figured it out. I’m sure we’ll just get in and figure it out as opposed to test it and maybe do it or not do it. I think we’ll really get in.”

Any talk of an ad-supported Netflix however should be considered preliminary, with CFO Spencer Neumann last month stating that an AVOD Netflix is “not in our plan right now,” but added “never say never”. 

Should Netflix continue to struggle to hit its targets going forward, both more aggressive clamping down on account sharing and support for advertising may be looked at more intensely as a solution.

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