Netflix, the world’s largest streaming service, saw a dip in subscribers globally for the first time since October 2011.
At the end of the first quarter, the company reported 221.6 million global subscribers, a loss of 200,000 and a miss of the projected 2.5 million net adds.
That’s a far cry from the 8.3 million added last quarter, 1.2 million of those coming from North America.
In an even bleaker outlook, Netflix is projecting it will lose another 2 million in the second quarter, despite the return of popular series such as Stranger Things and Ozark.
Netflix hiked prices in January in the U.S. and Canada for the first time since 2020 in a move designed to drive revenue, but it also resulted in reduced churn. Netflix lost 600,000 customers in the region this quarter, which it said was due to the price change and in line with expectations. While the streamer added subscribers in the U.S. and Canada last quarter, it previously lost 433,000 in the third quarter of 2021.
The dip also comes just a quarter after the company said it still has “tremendous room for growth.”
Netflix pointed to “factors [it] doesn’t directly control” related to broadband homes, including the uptake of connected TVs, video on demand and data costs. However, the company noted it still expects those factors to improve over time.
The company also blamed password sharing, estimating that in addition to the 221.6 million subscribers, Netflix is also in 100 million more homes, including over 30 million in the U.S. and Canada.
“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 company said in a letter to shareholders.
In a reversal of a years-long position, an advertising tier may be coming to Netflix. Company co-founder and co-CEO Reed Hastings said during the company’s pre-recorded earnings interview Tuesday that Netflix is considering experimenting with lower-cost, ad-supported packages.
“Those that have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription,” said Hastings. “But as much as I’m a fan of that, I’m a bigger fan of consumer choice. And allowing consumers who would like to have a lower price and are advertising-tolerant [to] get what they want, makes a lot of sense.”
The reversal comes after Disney+, arguably Netflix’s most significant competitor, announced its upcoming ad-supported tier. HBO Max with Ads launched last year, and Peacock has leaned on an ad-supported model since its launch.
“It’s working for Hulu, Disney’s doing it, HBO did it,” said Hastings. “All these 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.”