Netflix has lost almost 1.2 million subscribers in 2022. Is this the beginning of the end for the world's most popular streaming service? Netflix announced a drop in subscribers, with almost a million subscribers choosing to close their accounts in the second quarter of 2022.

The company's decline in subscribers over the second quarter of 2022 doesn't come as a major surprise considering the company's decisions. Let's look into why this may have happened and see what the company plans to do about it.

Netflix Loses 970,000 Subscribers in Q2 of 2022

Netflix's earnings report for Q2 2022 shows the company lost 970,000 subscribers, marking two quarters in a row in which Netflix has lost subscribers. If you'll remember, the company lost 200,000 accounts during the previous financial period.

However, the dip in subscriber numbers doesn't come as a surprise. Netflix was anticipating a two-million-subscriber loss during its 2022 Q1 financial report. Therefore, losing under a million subscribers during the second quarter is a lot better than anticipated.

The company continues to blame account sharing and competition for the loss of subscribers.

Why Is Netflix Losing Subscribers?

The loss in numbers for Netflix is undoubtedly upsetting for the company itself and its stockholders, but it isn't necessarily surprising. Here are some of the reasons why this is happening.

1. Netflix Pulled Its Service From Russia

Following the start of the war in Ukraine, Netflix joined hundreds of companies worldwide and decided to stop its activity in Russia. After pulling the plug on its Russian operations, the company admitted to losing around 700,000 subscribers.

Then, ever since the start of the war, we've seen a heavy impact of the war in Ukraine on prices. With a sluggish economy, it's easy to understand why some people would cancel their Netflix accounts in order to pay for food, housing, and other bills.

2. Netflix Hiked Up Prices in US and Canada

At the beginning of 2022, Netflix decided to increase its subscription price in the United States and Canada. Faced with the new costs, subscribers canceled their Netflix accounts instead. Netflix claims 600,000 subscribers in North America canceled following the price hike from January 2022.

3. Netflix Account Sharing Slows Down Growth

One of the most significant issues Netflix has struggled with over the years has been account sharing. Many users share their Netflix passwords, despite the fact that the Terms of Service specifically prohibit it.

Netflix estimates that 100 million households worldwide, with 30 million of those in the USA and Canada, are using the service without paying for it.

Considering that Netflix has 220.67 million subscribers worldwide, adding another 100 million would be a massive feat.

4. Netflix Keeps Losing Content From Media Companies

Netflix has lost tons of content from various major networks across the US. Whether we're talking about shows from NBC, CBS, AMC, and so on, they've all gone to other streaming platforms. Media companies like HBO Max and Discovery+ have also been merging, launching their own streaming services, and pushing their content through those outlets instead of licensing through Netflix.

This has pushed Netflix to invest billions in creating original content. While Netflix's original content is OK, people want to watch some of their favorite TV shows and old-school classics.

5. Quality of Content

As Netflix continues creating original content for its platform, the shows' quality is sometimes questionable. There are notable stars, like Stranger Things, which generated 1.3 billion hours viewed in the first four weeks after the fourth season's release, but many of the shows and movies are sub-par. It's clear the company is investing in quantity rather than quality, hoping that some of the titles it releases will be successful.

Unfortunately, viewers are not pleased with what's available, and they'll continue canceling their accounts if they can't find something worthwhile to watch. There's also a general annoyance with Netflix due to the decision to cancel shows after one season even though fans become invested in those stories.

6. There Are Too Many Streaming Services

Nowadays, there are too many streaming services available. On top of Netflix, Hulu, HBO Max, and Amazon Prime Video, we have Peacock, Paramount+, Disney+, Apple TV+, ESPN+, etc.

Each platform delivers a specific set of shows and movies people are looking for, so it all comes down to which ones they'd rather pay to watch. Sometimes, Netflix may not cut it, especially since it's also one of the pricier options on the market.

How Netflix Plans to Combat These Losses

Netflix's growth has slowed down a bit, so it's time for the company to take further steps to ensure it wins the streaming war. Adding subscribers and keeping the revenue up will require more work moving forward.

One of the first things Netflix is going to tackle is account sharing. Previously, Netflix started warning about password sharing and ran a trial asking subscribers in some countries to pay extra to be allowed to share their accounts voluntarily. Netflix also introduced an Add a Home feature in certain Latin American countries, which means people will need to pay extra for sharing their account with other households, with the fee being around $3.

Therefore, it is safe to assume that measures against password sharing will be implemented sooner rather than later.

Another thing that Netflix has admitted to considering is launching an ad-supported plan. Most streaming services offer such a plan, including Hulu, Peacock, and Paramount+. Offering a cheaper plan may be a good solution, especially considering how many people decided to cut Netflix out after its latest price hike.

Netflix Losing Customers Is Not the End of the World

While it's true that losing customers is a hard pill to swallow for Netflix, especially after more than a decade of constant growth, we must admit that special circumstances led to this.

Ultimately, however, as consumers, we get to decide which platforms we want to subscribe to and which ones should be left out. With so many options nowadays, Netflix should definitely be on its toes if it wants to keep its subscribers.