Netflix flickers

Computer games fair Gamescom in Cologne
Gamers and visitors take a rest at the booth of Netflix during Europe's leading digital games fair Gamescom, which showcases the latest trends of the computer gaming scene in Cologne, Germany, August 21, 2019. REUTERS/Wolfgang Rattay - RC139FD73470

NEW YORK, April 19 (Reuters Breakingviews) - Covid-19 brought Netflix (NFLX.O) new users. With the pandemic largely history in the video-streaming service’s big markets, though, it’s revealing other shifts. The company on Tuesday reported its first drop in subscriber numbers since 2011 read more . The immediate result was a roughly 25% plunge in its shares in after-hours trading, a loss of nearly $40 billion in market value for a stock that was already down 42% this year.

The 222 million subscribers for the first quarter would have been slightly up on the prior period but for 700,000 accounts Netflix wound down in Russia. But the company co-led by Reed Hastings and Ted Sarandos is forecasting a decline in the current quarter, too.

Netflix blames not only the post-Covid slowdown but macroeconomic factors, the pace of technological change, and competition from (AMZN.O) and others. In addition, it’s targeting households using other subscribers’ passwords. The company reckons there are more than 100 million such freeloaders, and it wants them to pay. That could improve earnings but annoy users. Continuously reinventing itself has been a Netflix strength, but it’s not easy. (By Richard Beales)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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