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NETFLIX CHILL

How did Netflix lose subscribers in 2022?

Jason Bateman and Julia Garner pose in front of the logo for the Netflix series "Ozark"
REUTERS/Mario Anzuon
Jason Bateman and Julia Garner at the premiere for the Netflix original series “Ozark”
  • Adario Strange
By Adario Strange

Media & entertainment reporter based in New York

Published Last updated

Netflix lost 200,000 subscribers globally in the first quarter of 2022—and predicts it will lose another 2 million subscribers in the second quarter.   

In January, the company predicted an uptick in subscribers of about 2.5 million subscribers. Its first-quarter letter to shareholders (pdf) explained the disconnect which left it with 221.6 million subscribers total, down from 221.8 million at the end of 2021:

“Covid clouded the picture by significantly increasing our growth in 2020, leading us to believe that most of our slowing growth in 2021 was due to the Covid pull forward. Now, we believe there are four main inter-related factors at work.”

1. Competition from new streaming services

This was actually the third reason Netflix listed in its quarterly letter, but it’s by far the most interesting.

“Competition for viewing with linear TV as well as YouTube, Amazon, and Hulu has been robust for the last 15 years,” the company noted. “However, over the last three years, as traditional entertainment companies realized streaming is the future, many new streaming services have also launched.”

Netflix didn’t mention the new services by name, but its acknowledgment of the crowding of the space is a clear indicator that its lead position is in jeopardy.

Services like Disney+, and Apple TV+, which beat Netflix to become the first streaming service to win a Best Picture Oscar, have become too good and competitively priced (just as Netflix raises prices) for consumers to ignore.

2. Broadband adoption trends

This actually was the first factor Netflix draw attention to in its letter, saying:

[I]t’s increasingly clear that the pace of growth into our underlying addressable market (broadband homes) is partly dependent on factors we don’t directly control, like the uptake of connected TVs (since the majority of our viewing is on TVs), the adoption of on-demand entertainment, and data costs.

3. Netflix account password sharing

“We estimate that Netflix is being shared with over 100 million additional households,” on top of its actual subscriber base, the company told shareholders. “Account sharing as a percentage of our paying membership hasn’t changed much over the years,” it noted, but it’s making it harder to keep the official subscriber count growing.

4. The macro picture

Although Russia isn’t one of Netflix’s leading markets among the over 190 countries it operates in, the company cited the war in Ukraine, which resulted in Netflix’s exit from Russia, as one of the factors in its slowing growth. “Geopolitical events such as Russia’s invasion of Ukraine, and some continued disruption from covid are likely having an impact as well,” the company noted. 

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