Netflix reported a net loss of 200,000 paid members worldwide in the first three months of 2022, falling short of its own already low expectations of 2.5 million new subscribers for the first quarter. Netflix lost 640,000 subscribers in the United States and Canada, where it estimates there could be as many as 30 million accounts being shared with other households. Netflix lost subscribers in every other region apart from the Asia Pacific, where it gained just over a million. The company expects the losses to continue in the second quarter, when it forecasts that it will lose a further 2 million members.
The net number of Netflix subscribers fell by 200,000 to 221.64 million, compared with the company forecast of a gain of 2.5 million and an increase of 4.0 million in the same quarter the previous year.
The suspension of its service in Russia and the winding-down of all Russian paid memberships following the invasion of Ukraine resulted in a net loss of 0.7 million members. Otherwise, the company said it would have gained 0.5 million. Yet that it still below its own conservative forecast of 2.5 million, which had looked like a low-ball estimate.
In the United States and Canada, the number of members fell by 640,000 to 74.58 million, while in Latin America there was a fall of 350,000 to 39.61 million. In Europe and the Middle East there was a fall of 300,000 to 73.73 million. The number of members in the Asia Pacific region rose by 1.09 million to 33.72 million.
The company forecasts a net loss of a further 2 million net members in the second quarter of 2022, compared to a gain of 1.5 million in the second quarter the previous year.
Netflix says that while it has 222 million paying households, it estimates that Netflix is being shared with over 100 million additional homes, including over 30 million in the United States and Canada. The company sees this as an opportunity rather than a threat, as it seeks to find ways to convert at least some of them to paying accounts. Co-founder Reed Hastings told analysts that this was not a priority when it was growing subscribers but not it is working “super hard” on it. “I know it’s really disappointing for investors,” he said, “but internally this is our moment to shine.”
Netflix believes that in the longer term, much of its growth will come from outside the United States, although it does not seem to be growing as fast as it might have expected.