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Netflix Loses Subscribers For The First Time, With 100 Million Users Sharing Passwords

After leading the streaming world for more than a decade, Netflix has reported its first customer loss in its first quarter.

A decade of meteoric growth saw Netflix shake Hollywood to its core, changing the way consumers watch television and movies forever. 

However, for the first time, Netflix reported a loss of 200,000 customers in the first quarter, according to a statement delivered at the close of US markets on Tuesday.

Netflix had expected to gain customers in the first quarter, not lose them, and as such, the company’s shares are already down more than 20 per cent in after-hours trading.

And it is set to get worse for the streaming giant, with the company projecting it will lose another 2 million customers in the current second quarter. If the prediction is correct, it would be the worst ever year as a public company. 

Netflix management pointed to four causes, including the prevalence of password sharing and growing competition. 

The company said there are 100 million households that use its service and don’t pay for it due to password sharing from its 221.6 million subscribers. 

The company is experimenting with ways to sign up those viewers.

“Our relatively high household penetration -- when including the large number of households sharing accounts -- combined with competition, is creating revenue growth headwinds,” management wrote in a letter to shareholders.

The company’s Co-CEO, Reed Hastings, also stated they are looking at adding an advertising-supported version of the service that would see a lower-cost subscription with the inclusion of ads potentially becoming available.