Netflix will report a loss of up to 2 million subscribers with the release of its second quarter financial report this afternoon.
The staggering number was predicted in its latest report published in April, which revealed that the streaming giant had suffered a net loss of 200,000 subscribers since early 2022 – its first drop in a decade.
The report is said to come in the wake of Latin America’s rollout of a subscription policy aimed at testing crackdown strategies on password sharing, which Netflix has cited as a key cause of its declining numbers.
The streaming service is asking subscribers in five Latin American countries to pay an additional fee if they permanently use the platform in another household.
Users in El Salvador, Guatemala, Honduras, Dominican Republic, and Argentina will receive a notification on their account if it’s been used away from their primary residence for more than two weeks. They will be asked to pay an additional $2.99 ($1.70 in Argentina) on top of their regular subscription to continue watching at this other location.
The additional fee does not apply to users watching on mobile devices such as laptops, phones and tablets.
The move has the potential to make or break Netflix, which is struggling to find a way to shore up its falling profits while maintaining its subscription-based revenue platform.
Analysts have said Netflix is doing everything it can to avoid exposing users to ads or selling their data, but many say it’s only a matter of time before the company is forced to address it.
Pictured: Netflix subscribers for the past few months are shown along with an estimated first quarter of 2022
Netflix paid subscriber growth showed a sharp decline from 2020 through the first two quarters of 2021
The move comes after Netflix’s share price plummeted more than 65% since the start of the year after announcing it had lost 200,000 subscribers in April. That loss could pale in comparison to the $2 million loss the company forecast in the second quarter.
Netflix has previously blamed widespread abuse of password sharing by users as a major contributor to its subscription numbers, stating that over 100 million households use accounts that others pay for.
“The widespread use of account sharing between households today is eroding our long-term ability to invest in and improve our service,” Netflix director of product innovation Chengyi Long wrote in a blog post promoting the new Add Home feature ” explained.
The company said password sharing was a particular problem in Latin America and introduced measures to curb it back in March by asking users in Costa Rica, Chile and Peru to add additional users.
The news follows Netflix’s devastating first quarter, which saw the company lose a record number of subscribers and an overnight loss of $50 billion in valuation in a single night after investor Bill Ackman withdrew $1.1 billion in funding would have.
“Well, it’s f***h,” Reed Hastings said after April’s burglary at a city hall with employees Wall Street Journal.
The hedge fund manager dumped the 3.1 million shares he bought just three years earlier before turmoil at the streaming giant deepened, and announced that his New York-based Pershing Square Capital Management was relocating due to the “unpredictable” future of the company from the investment.
“Well it sucks,” Reed Hastings said at a town hall with employees after Netflix lost $1.1 billion in investments in April
Ackman told CNBC’s Scott Wapner, “I’m 100 percent willing to admit when I’m wrong and 100 percent willing to admit quickly when I’m wrong.”
“It’s a great company led by a great management team at a time where there is a degree of uncertainty that it will not fit into Pershing Square’s portfolio.”
He poured over $1 billion into the streaming service in January, just days after a disappointing subscription forecast pushed its share price lower.
But he scrapped that investment after the company reported its 200,000 subscriber loss, despite the exit costing him $400 million.
Netflix’s decision in early March to shut down service in Russia after it invaded Ukraine alone resulted in the loss of 700,000 members.
