The pandemic was great for Netflix, given it got millions of people stuck indoors with nothing better to do than watch Tiger King. Now we’re leaving the pandemic traditions of lockdowns behind us (if not the actual virus itself, which doesn’t seem to be keen on sticking to schedules), Netflix’s subscriber count has dropped a touch.

In the first quarter of 2022, Netflix has reported a loss of 200,000 subscribers — or around 4% of the New Zealand population. That sounds like a lot, because it is, but it’s worth noting that Netflix can wipe its tears on the monthly invoices it sends to its 222 million remaining subscribers.

But it is the first time the company hasn’t reported growth in a decade, so what’s Netflix’s excuse to pacify antsy shareholders? Curiously, it doesn’t blame the pandemic, which it says “obscured the picture” rather than being to blame. Instead, it’s a triple threat of competition, limited expansion opportunities and the scourge of password sharing.

The last of these is clearly a problem: Netflix reckons that on top of its 222 million subscribers, there are 100 million other ghost subscribers — which is to say, people who ‘borrow’ others’ passwords rather than paying themselves. 

The company could have a couple of options to tackle this. It’s been testing allowing subscribers two additional “sub-members” for around NZ$4.50 a month in Chile, Costa Rica and Peru, which could turn some of these ghosts into discount customers. 

And co-CEO Reed Hastings even said the dreaded ‘A’ word during a recent earnings call: Advertising.

“Those who have followed Netflix know that I have been against the complexity of advertising, and a big fan of the simplicity of subscription,” he said. “But as much as I am a fan of that, I am a bigger fan of consumer choice. And allowing consumers who would like to have a lower price, and are advertising-tolerant, get what they want makes a lot of sense.”

As for the other two problems, competition is pretty obvious. Disney Plus, Apple TV Plus and Amazon Prime Video are all available internationally, and that’s not even mentioning all the country-specific options. Subscribing to all of them isn’t an option for most people and that clearly hits Netflix as much as anyone else — possibly more so given it can’t offer free Amazon delivery or be bundled with a bunch of Apple services. Well, obviously it could, but that would be mad.

As for the third problem, there’s equally little Netflix can do about it. It’s expanded about as far as it can into countries with the right infrastructure (speedy broadband and smart TV adoption), and it’s actually lost ground by cancelling its service in Russia thanks to the Ukraine situation. In fact, if Russia was kept online it would have gained 500,000 customers rather than losing 200,000.

So it’s not an awful picture overall, but with the company still in debt and with original content ridiculously expensive, any kind of slowing down is worrying. Amazon, Disney and Apple all have other parts of the business to subsidise throwing good money after bad with streaming, while Netflix does not. Brand advantage or not, the honeymoon period may finally be at an end.