Shares of Netflix fell more than 7 percent on May 18 after new data showed the streaming giant is losing long-term subscribers.
Meanwhile, new subscribers accounted for just 60 percent of cancellations in the first quarter, down from 64 percent in the fourth quarter of 2021, according to Antenna data.
Overall in the first quarter of 2022, cancellations rose to 3.6 million people, up from about 2.5 million in the first quarter of 2021.
“As demand for Netflix originals and the entire catalog continues to fall domestically and globally while demand for originals on other services grows, Netflix has to refocus its content strategy to extract the most value from every series ordered,” Parrot Analytics said in its quarterly streaming report.
Netflix shares have fallen 47 percent since the company released its earnings report on April 19.
The layoffs represent approximately 2 percent of Netflix’s workforce in the United States and Canada.
“These changes are primarily driven by business needs rather than individual performance, which makes them especially tough as none of us want to say goodbye to such great colleagues,” the company said in a statement. “We’re working hard to support them through this very difficult transition.”
In April, Netflix said it ended the quarter with roughly 222 million subscribers and vowed to boost growth by improving the quality of its content.
The company said its plan is to “reaccelerate our viewing and revenue growth by continuing to improve all aspects of Netflix—in particular, the quality of our programming and recommendations, which is what our members value most.”
“On the content side, we’re doubling down on story development and creative excellence,” Netflix said in its earnings letter.
Elsewhere last month, Netflix co-founder and co-CEO Reed Hastings said the company is considering offering lower prices to customers with advertising, something that multiple other competitors are doing but that Netflix has previously been against.
“Allowing consumers who would like to have a lower price and are advertising-tolerant get what they want, makes a lot of sense,” Reed said during the April earnings call.
The lawsuit was filed in federal court in San Francisco by a Texas-based investment trust seeking damages for declines in Netflix’s share price after the company missed its subscriber growth estimates.