Netflix Loses 200,000 Subscribers, Expects to Lose Even More

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For the first time in more than a decade, Netflix reported that it had lost subscribers in the previous quarter. The streaming giant lost over 200,000 subscribers in the period while the company expects to lose close to two million in the current quarter.

The unexpected loss in revenue led to a 25% plunge of the streaming giant’s stock price in after-hours trading on Tuesday.

In order to make up for the loss in subscribers, Netflix will reportedly be cracking down on password sharing. In a letter to shareholders, executives estimated that many households are using the service without paying for it, by signing in under accounts of its 221.6 million paying subscribers, and that they hope to “reaccelerate” revenue growth “through improvements to our service and more effective monetization of multi-household sharing.”

Netflix described cutting off password sharing as “a big opportunity” in the shareholder letter, stating that “these households are already watching Netflix and enjoying our service.”

According to MarketWatch, Netflix executives have already been testing methods that could curb account sharing. The company has not mentioned specifics, though their plan would likely involve IP banning. In March, the company said it started two new paid-sharing features, where current members have the choice of paying for additional households, in three markets in Latin America.

“While we won’t be able to monetize all of it right now, we believe it’s a large, short- to mid-term opportunity,” the company said. “As we work to monetize sharing, growth in ARM (average revenue per membership), revenue and viewing will become more important indicators of our success than membership growth.”

Price hikes are believed to have been a large driving factor in the company’s hemorrhaging subscriber count. Netflix recently increased its prices in the U.S. and Canada after upping them the year before as well.

Increased competition is also thought to be cutting into the company’s revenue. Netflix once held a monopoly on mail-in DVD rentals, and more or less held one on streaming in the early 2010’s. This is not the case anymore, however, as Netflix now has numerous big-name competitors in Amazon, NBC and Disney, to name a few.

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