STORY: Netflix reported losing subscribers for the first time in over a decade on Tuesday, and said it's considering offering a lower-priced service plan supported by ads to combat its lagging growth.
Citing rising inflation, its suspension of service in Russia and fierce competition from other streaming services, Netflix said it lost 200,000 subscribers in the first quarter -- a sharp reverse in fortune for a company that thrived throughout the global health crisis.
And despite the return of highly anticipated series such as "Stranger Things" and "Ozark," the company further forecast it would lose 2 million subscribers in the second quarter, sending its stock tumbling more than 20% in after-hours trading on Tuesday.
CEO Reed Hastings has long dismissed the idea of offering an ad-supported service option at a lower price point.
But he confirmed in an interview with investors Tuesday that his thinking had changed, citing the success of similar offerings from rivals like HBO Max and Disney+.
Netflix's gloomy predictions come as competitors like HBO Max and Apple TV churn out high-quality content, intensifying the so-called streaming wars.
Netflix is also planning to clamp down on account sharing, practiced by nearly 100 million households around the world.
And as growth slows in mature markets like the U.S., the company is increasingly focused on other parts of the world and investing in local-language content.
But streaming shows isn't the only form of entertainment competing for consumers' time.
In Deloitte's latest Digital Media Trends survey, the majority of Gen Z and Millennial consumers polled said they spend more time on TikTok and YouTube than streaming services.