Netflix loses 200K subscribers in Q1 2022; will eventually charge 100 million shared accounts

Netflix has reported its quarterly earnings that reveals that it has earned a revenue of $7.87 billion during the first quarter of 2022, a 10% increase YoY, thanks to 8% year-over-year increase in average streaming paid
memberships and 2% year-over-year growth in Average Revenue per Membership.

The company said that it lost 200,000 subscribers in the quarter, compared to a forecast of 2.5 million and 4 million in the same quarter a year ago. It lost 700 million subscribers due to suspension of its service in Russia and winding-down of all Russian paid memberships. It expects to lose another 2 million in the second quarter of 2022.

Netflix says that out of 222 million paying households, it estimates Netflix is being shared with over 100 million additional households, including over 30 million in the US and Canada region. To increase the revenue, it is looking to monetize sharing, so the 100M+ households using another household’s account will eventually be charged.

Regarding this, Netflix said:

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.

Sharing likely helped fuel our growth by getting more people using and enjoying Netflix. 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. So early last year we started testing different approaches to monetize sharing and, in March, introduced two new paid sharing features, where current members have the choice to pay for additional households, in three markets in Latin America.

There’s a broad range of engagement when it comes to sharing households, from high to occasional viewing. So while we won’t be able to monetize all of it right now, we believe it’s a large short- to midterm opportunity. As we work to monetize sharing, growth in ARM, revenue and viewing will become more important indicators of our success than membership growth.

Author: Srivatsan Sridhar

Srivatsan Sridhar is a Mobile Technology Enthusiast who is passionate about Mobile phones and Mobile apps. He uses the phones he reviews as his main phone. You can follow him on Twitter and Instagram