Netflix Inc. users are watching the streaming service less than they once did, the latest sign of engagement woes for the world’s most valuable entertainment company, according to people familiar with the matter.
The company’s churn in the US has remained steady at 2% and is the best in the industry, according to Antenna, a research firm. Earlier this month, Netflix fired Chief Content Officer Bela Bajaria, as well as film chief Dan Lin, and cut 6% of the staff. Because the data is confidential, customers aren’t opening the app on as many days a month as they did a couple of years ago, said the people, who asked not to be identified. Because fewer people were using each account, it started after the company cracked down on password sharing in 2022 and, at first, executives assumed it would be short-term,.
The company uses a metric known as QPD, or qualified play days, to measure how often customers use the app. The decline in those metrics has worried Netflix leadership. But the trend has continued, raising the risk that people are finding less value in the service or spending more time with rivals. Netflix has increased its programming budget and is expanding into new categories, such as podcasts and live sports, to attract new customers and retain old ones. The decline in usage has been modest and hasn’t led to mass cancellations. The company addressed its softness in the US by changing leadership. Peter Rice, a veteran of Walt Disney Co. and 21st Century Fox, will now lead the company’s content strategy.
Co-Chief Executive Officer Ted Sarandos told analysts on a call this week that viewership in the US in particular is “just not growing as fast as it could or as fast as we’d like. But he and Co-CEO Greg Peters also said the company is doing well outside the US and has a very healthy business model. Netflix said this week that price increases haven’t led to any abnormal spikes in cancellation.
The company reported its third consecutive quarter of slowing revenue growth and projected it would slow again in the current quarter. Netflix’s overall share of TV viewing in the US has stagnated as customers flock to free services like YouTube. Shares in Netflix have slipped about 29% this year as investors worry about the company’s slowing growth. Netflix said advertising sales this year will fall about $300 million short of their earlier projections, which it blamed on a slower rollout of new products.
