When Netflix releases its financial report for the second quarter this afternoon, it’s anticipated to reveal a loss of up to 2 million customers.
The startling figure was foreshadowed in its most recent report, which was released in April and revealed that the streaming juggernaut has lost a net of 200,00 subscribers since the beginning of 2022, marking the first fall in a decade.
The research is scheduled to be released shortly after a launch of Latin American subscription policies testing tactics for preventing password sharing, which Netflix has identified as the main factor behind its rapidly declining subscriber numbers.
If users in five Latin American nations often use the platform in a different home, the streaming service will charge them an extra cost.
If their account has been used outside of their country of residency for longer than two weeks, users in El Salvador, Guatemala, Honduras, the Dominican Republic, and Argentina will get a message. To continue watching at that different location, they will need to pay an extra $2.99 ($1.70 in Argentina) on top of their usual membership.
The additional fee will not apply to users watching on mobile devices, including laptops, phones, and tablets.
The move has the potential to make or break Netflix, which has been struggling to find a way to shore up its plummeting profits while maintaining its subscription based revenue platform.
Analysts have said that Netflix is doing everything it can to avoid subjecting users to advertisements or selling their data, but many predict it is only a matter of time before the firm is forced to turn to that.
The move comes after Netflix’s share price plummeted over 65% since the start of the year following the announcement of its 200k subscriber loss in April. That loss could pale in comparison to the 2million loss the firm has been predicted as a possibility in Q2.
In the past, Netflix has cited extensive password sharing by customers as one of the main reasons for its declining subscriber numbers, claiming that over 100 million households are abusing accounts that have been purchased by others.
According to Chengyi Long, head of product innovation at Netflix, “today’s extensive account sharing between homes weakens our long-term ability to invest in and improve our service.” Chengyi Long also explained the new “add a home” function in a blog post.
In March, the business asked customers in Costa Rica, Chile, and Peru to register extra accounts in an effort to combat password sharing, which it claimed to be a specific issue in Latin America.
The announcement comes on the heels of Netflix’s disastrous first quarter, during which the firm lost a record number of users and overnight lost $50 billion in valuation after investor Bill Ackman withdrew $1.1 billion in funding.
‘Well, it’s a b***h,’ Reed Hastings said in a town hall with employees after the plunge in April, according to the Wall Street Journal.
The hedge fund manager sold the 3.1 million shares he had purchased just three days before the crisis at the streaming giant reached new heights. He made the announcement on behalf of his New York-based Pershing Square Capital Management, citing the firm’s “unpredictable” future.
“I’m 100 percent ready to say when I’m wrong and 100 percent ready to admit when I’m wrong, swiftly,” Ackman said to CNBC’s Scott Wapner.
It’s a wonderful firm operated by a great management team during a period of uncertainty that prevents it from fitting into the Pershing Square portfolio.
He invested more than $1 billion in the streaming service in January, just days after a weak subscription prediction caused the stock price to decline.
However, he sold that stake once the business disclosed its loss of 200,00 subscribers, even though the exit strategy cost him $400 million.
Netflix’s decision in early March to suspend service in Russia after it invaded Ukraine resulted in the loss of 700,000 members alone.