Moscow - Shares of the US-based streaming service Netflix have plunged by 25.7% in after-hours trading on Wednesday, following the company's announcement of losing 210,000 paid subscribers in the first quarter of 2022 after leaving the Russian market.
The fall stemmed in part from Netflix’s decision to suspend its services in Russia amid the conflict in Ukraine, which resulted in a loss of 700,000 subscribers.
“Macro factors, including sluggish economic growth, increasing inflation, geopolitical events such as Russia's invasion of Ukraine, and some continued disruption from Covid-19 are likely having an impact as well.
“The suspension of our service in Russia and winding-down of all Russian paid memberships resulted in a -0.7m impact on paid net adds,” Netflix wrote in a letter to shareholders on Tuesday.
The total number of paid Netflix memberships amounted to 221.64 million in the first quarter of 2022, which is 210,000 less than in the fourth quarter of 2021, the company said.
On February 24, Russia launched a military operation in Ukraine after the breakaway republics of Donetsk and Luhansk appealed for help in defending themselves against Ukrainian forces.
In response, the US and the EU rolled out a comprehensive sanctions campaign against Moscow, which includes airspace closures and restrictive measures targeting numerous Russian officials and entities, media and financial institutions. Some foreign companies have decided to leave Russia altogether.
According to Asian News International, the company is expecting to nail down its ad-supported streaming strategy over the next year or two.
Co-chief executive Reed Hastings said on the earnings call that the company is open to offering even lower prices with advertising as a consumer choice.
"Those that have followed Netflix know that I've been against the complexity of advertising and a big fan of the simplicity of subscription. But as much as I'm a fan of that, I'm a bigger fan of consumer choice,“ said Hastings.
“And allowing consumers who would like to have a lower price and are advertising-tolerant get what they want, makes a lot of sense."